a.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
8000=P*(1.06)^3
P=8000/(1.06)^3
=$6717(Approx).
2.A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Future value of 3500=3500*(1.06)^3
=4168.556
Future value of annuity=Annuity[(1+rate)^time period-1]/rate
=Annuity[(1.06)^3-1]/0.06
Hence
8000=4168.556+Annuity[(1.06)^3-1]/0.06
8000=4168.556+Annuity*3.1836
Annuity =(8000-4168.556)/3.1836
=$1203(Approx).
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