Calculating deposit needed You put $6,000 in an account earning 3%. After 5 years, you make...

Question

Question

Answer 1

Answer #1

Step-1:Future value of initial deposit

Future value	=	PV	*	(1+i)^n		Where,
	=	$ 6,000.00	*	(1+0.03)^8	PV	=	$ 6,000.00
	=	$ 6,000.00	*	1.26677		i	=	3%
	=	$ 7,600.62				n	=	8

Step-2:Balance future value of deposit after year 5

Total Future value	$ 21,000.00
Future value of initial deposit	$ 7,600.62

Future value of year 5 deposit	$ 13,399.38

Step-3:Value of deposit at year end 5

Year end 5 deposit	=	FV	*	(1+i)^-n		Where,
	=	$ 13,399.38	*	(1+0.03)^-3	FV	=	$ 13,399.38
	=	$ 13,399.38	*	0.915142		i	=	3%
	=	$ 12,262.33				n	=	3

Answer 2

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