Use factors only to solve the following problems :

The basic Toyota Camry LE model currently lists for $21,050. Let us assume that Toyota Corporation typically raises its prices at yearly intervals and will continue to do so in the foreseeable future.

(a) If its selling price grew by an average of 2.0 percent per year over the last 4 years, what was the selling price 4 years ago?

Given: Y = 21050, I = 2%, n = 4 yrs., Find X.

X = Y/ (1 + 0.02)^4 = $19,446.95

X = 21,050 (P/F, 2%, 4) = $19,445.99

0.9238

2. At the rate of increase specified in (a), in how many years from now will the price have increased to $25,000? You may use Goal Seek Function here.

Given: X = 21050, Y = 25000, I = 2%. Find n.

25000 = 21050 (F/P, 2%, n), or (F/P, 2%, n) = 1.1876,

Using Goal Seek function, n= 8.699 years

NOTE: Use of Goal Seek Function is NOT allowed for part (c) below .

(c) Ten years from now, if the Toyota Camry LE sells for $27,500, what is the average annual rate of price increase during this 10 year period?

Given: X = 21050, Y = 27500, n = 10 yrs. Find i.

F = P (1+i)^(10) : log (F/P) = 10*log(1+i) : Solve for i

Log (1+i) = (1/10) *(log(F/P)) => i = 0.027089 or 2.71%