Annuities - Home work for extra points
You would like to buy a new car in three years. The current price of the
car is 320,000.00. You have an older car that you will sell after two years
from now. The price of your car will be 80,000.00 in two years. Over the
three years you will save for the remaining price New car minus what you
have from your existing car. How much you have to save regularly every
month by ahead payment, if a bank provides you 12 % p. a. and the interest
is calculated two-times in one year. Further, you should consider that in the
economy is expected average annual inflation of 3 %. And finally, you have
to reflect a tax paid at the end of every year, where the tax rate is 15 %.
Advice: Respect time value of money by all cash-flows.
1