score: 0 of 1 pt 3 of 8 (5 complete) HW Score: 50%, 4 of 8 pts Problem 4-81 (alg

Question

score: 0 of 1 pt 3 of 8 (5 complete) HW Score: 50%, 4 of 8 pts Problem 4-81 (algorithmic) Question Help Suppose that the parents ot a young child decide to make annual deposits into a savings account, with the tirst deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday, the withdrawals as shown on the diagram below will be made. If the effective annual interest rate is 6% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (C in uour eolution The annual deposits in years 5 through 15 ares(Round to the nearest cent) More Enter your answer in the answer box and then click Check Answer All parts showing Clear All

Explanation / Answer

The rate of interest is = 6% per annum

The worth of the outflow of the cash at 17th birthday

Worth = 2200(P/F,6%,1) + 2500(P/F,6%,2) + 2800(P/F,6%,3) + 3100(P/F,6%,4)

Worth = 2200(.9434) + 2500(.8900) + 2800(.8396) + 3100(.7921)

Worth = 2075.48 + 2225 + 2350.88 + 2455.51

Worth = 9106.87

Worth of the outflow at 15th Birthday

Worth = 9106.87 (P/F,6%,2)

Worth = 9106.87 (.8900)

Worth = 8105.1143

The annual deposits in years 5 through 15 or period of 10 years is

A = 8105.1143 (A/F, 6%, 10)

A = 8105.1143 (.0759)

A = 615.18 or Approx 615

The annual deposits in years 5 through 15 or period are $615

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