Question

help plz

4) (20 pts) A man decides to put a lump sum of money into a certified deposit for 5 years earning a monthly interest rate of 0.50%. He wants to have $4,000 to go on a vacation to Spain. How much money does he need to put into the certified deposit? (10 pts) Draw the cash flow diagram. Negative money is out of your pocket. a) b) (10 pts) What is the amount of money deposited initially?

Answer 1

$2965 should be put in a certified deposit for five years to get $4000

os diagram a) Cash t-S time to $ 4000 -$A -$ 2965 be put in certified depasit for Ave A Let yoars after ive years fubure valua of A Hence given by the fmula, ohera is amount invesled Tate of intereot number of years (number of bimeo comboun- A - ding is done or intereot is calculated infereot is calelated = 60 an monthy this in Since case basis n=5x12months F S4000 here Autue value given 0.5100 4000 = A Ci+o.oos) A COOS)G0 A C1. 3482 is O.O0S 4000 4000 $ 2965 4000 A (3 488S certified depasit fer S पु Henca 2965 Bve to be put in after give 4000 years coill