Find the values of these pictures How much do you have to deposit today if you w

Question

Find the values of these pictures

How much do you have to deposit today if you want to withdraw $400 one year from today, another $400 three years from today, if your bank pays 8% annual interest? The maintenance cost on a new car will be $40 the first year and the maintenance cost will increases by $l0 per year. How much would you need to put in the bank today when you buy a new car in order to pay all future maintenance Costs if you planned to keep the car for 5 years? Interest is 5% annually. You made a deposit of $1,500 today and you plan to leave it in the bank for 10 years. At the end of year 4, you need to withdraw $600 for an emergency. how much will you have in the bank at the end of 10 years, if the bank pay 10% interest annually?

Explanation / Answer

soln :

1) 400 = p ( 1+0.08)

p = 400 / 1.08

p= 370.37 should be deposited today to withdraw 400 one year from today .

If we have to withdraw another $ 400 3 years from today

400 = p ( 1+0.08)3

p = 400 / 1.259

p = $ 317.53 should be deposited to withdraw another $ 400 3 years from now.

2) maintenance cost for 1st year = $ 40

every year increase by $ 10

by 5 years maintenance cost = $ 80

80 = p ( 1+ 0.05) 5

p = 80 / 1.27

We have to deposit $ 62.68 today

3) deposit at the end of 4 years

f = 1500 ( 1+0.10)4

f = 2,196.15

at end of 4 years $ 400 is withdrawn

money left = 1,796.15

f= 1,796.15 ( 1+0.10)6

f = 3,181.98 is in the bank at the end of 10 years.

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