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Time Value of Money
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Your dream car costs Ks 8,000,000 now and the price will increase by 5% per year. The interest ratein a bank is 11% per year. How much should you save every year (in same amount) in next five year
(each deposit will be made at the end of the year) to buy the car in 5 years? How much should you
save every month in next five years to buy the car, assuming each deposit is made at the end of each
month?
Hint. FV of annuity
Answer 1
Ks 1,639,463
Answer 2
Ks 128,404.
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