Question

please help with this i do not know the correct answer thanks.

You want to take a dream vacation in 3.5 years. You plan to save up $5,000 in your vacation sinking fund. Assume an interest rate of 8% compounded annually. How much will you have to save if you make a lump sum deposit to the sinking fund (i) during the year or (ii) at the beginning of the year? (i) $1,540 and (ii) $1,540 (i) $1,640 and (ii) $1,640 (i) $1,640 and (ii) $1,310 • (i) $1,540 and (ii) $1,110

Answer 1

ANSWER): (D) (i) $1540 and (ii) $1110

tfme 3. yea /regyired at he endof 3.5 yeass Sawiny amount terest rate 8 % -nngthe (-yea eposkea amount after 8.5 year qmount become PC1-08 Lhere comfounded at the ea of yeser and 3] Starting (-2uing e oleposited amount a fter end of 3.5 yeas ampunt became - CHee comm pounded at -the eeadof yea 3 nyea P PCI.8 elurringthe (2-3Ayedeposited stotng am ount P Compeund ate because yeri not iconpleted7 ttal ameant PC1. P + PCI.08) 3 2-t a, qr, a. Sum of P o o o Г. ав—1 P a P |2597 o- o8 80 o. 2597 500 0 PL 3.24625 5000 50оо 3.24625 P 154o. 2387 y P 140 amount depesites the year $ 15,y0

Balance at Start Amount Deposited Interest on Balance at Balance at the Interest Rate Year of the Year Start of the Year End of the Year During the Year 0.00 1540 0 1540 8 0 123 1 1540.00 1540 8 3203 2 3203.20 1540 256 4999 0 (No Year Completed) 3 to 3.5 4999.46 0 4999.46 00

Start the yenr (o-1) clepoerte amouut atter 3. yea^ amouut become 3 PCL08 at end of ,2,3 year Here amount compounded stant of yeor ( -2) deposted anount =P fter 3.6 yea amount become amount poumded at te end of a,3 7eat Stat of year (2-3) oleposited amoun = P after 3.5 year amo unt beLome Here amount Compounded al the end of 3 year Stat year 3-4) deposited amouut f Here Compouudec mate be cauge yeal fs not Completed -total amouf Pli-08)' PC1.082 PC108) Sumof z Oa 36 048 o.08 PL.506 5000 y. 506 P - P lo9.63 P beginain oyea tepasite aunot = )lo at the

Amount Interest on Balance at Balance at the Balance at Start of Interest Rate Deposited at the Year End of the Year the Year Start of the Year Start the Year 1198.8 0 1110 1110 88.8 2308.8 1 1110 8 185 2494 3604 2 1110 8 288 3892 0 (No Year Completed) 3 3.5 5002 5002 1110