Can richard afford one of the sports cars

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Problem 1: Richard's grandfather put $10,000 into a savings account for him on the day he was born 25 years ago. The account pays a fixed interest of 4.5% p.a. Richard has not spent any of the money in the account. He would like one of the new sports cars. He has a car which he bought new 2 years ago. The car cost $20,000 and depreciates by 25% each year. He will trade this in. Tax and insurance for the sports car will amount to $2,100. He can claim back the unused insurance on his existing car. The annual premium, of $600 was paid 4 months ago. Richard can take out a loan of no more than $10,000. Can Richard afford one of the sports cars?

Reference no: EM132993595

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