I want to be able to buy a car with cash in 4 years. I have $5,000 that I can invest today. I can get a bond earning 6.5%. How much will I have for the purchase?

Question

I want to be able to buy a car with cash in 4 years.  I have $5,000 that I can invest today.  I can get a bond earning 6.5%.  How much will I have for the purchase?

Ms. Sue · Answer

If this is simple interest -- 5,000 * (4 * 0.065) = ? interest for 4 years Add the interest to the initial investment.