Little help - General Maths Assignment... (1 Viewer)

[crazathiest]

I don't really have a clue what I'm doing. :$

Quote (assignment)

New or Pre-loved?

New cars lose value as soon as you drive them out of the showroom. You would like to buy a car but are undecided as to whether buy a new or used one.

This task is in two sections:

Section A:
You are looking to purchase a new car. You will be provided with an advertisement for a car. You may assume that the cost of new cars increases by 2% each year.

You would like to buy a new car in 5 year's time. What amount should you invest each month in an account paying 6.95 % compounded monthly in order to afford your car?

Section B

i) For the car in your advertisement, use a spreadsheet to complete a depreciation table for 5 years. Refer to page 317 of your notes (ive got to find them)

ii) Draw a graph showing the value of the car over the next 5 years.

iii) Write a report on the best option for you, a new or used car?

You must justify your conclusion with calculations

Advertisement: From $41, 820 : Price excludes dealer delivery and statutory charges. Metallic colours $395 extra. Offer excludes Government contract, special assistance and rental fleet sales.

I kind of have a idea of what to do, but I'm pretty unsure as I'm not too good with financial maths.

Help would be appreciated, thankyou.

 

[michael1990]

How much is the car?

 

[watatank]

Section A:

first you gotta find out how much the new car will be worth in five years time. so use the compound interest formula A = P(1+i)^n (i = 2, n = 5, P = 41820) to get the value of the car in five years time.

then when you have got that value you know how much the car will be (from above), how many payments you will have to make (12mths * 5yrs =60), you know the interest it compounds at (6.95% mthly) so you use that annuity formula to find out how much you need to put in.

Section B:

you can just use A = P(1- i)^n to do the table changing n every time to get your different values. but consult your textbook.

 

[crazathiest]

How much is the car?

Advertisement: From $41, 820 : Price excludes dealer delivery and statutory charges. Metallic colours $395 extra. Offer excludes Government contract, special assistance and rental fleet sales.

So, compound and annuity forumla needed?