You borrowed S50,000 which yo deposits at the beginning of each the next 9 years

Question

You borrowed S50,000 which yo deposits at the beginning of each the next 9 years, but with the d 5% enable you to reach your $50,000 target? 4 points Save A u must repay in 10 years. You plan to make an initial deposit today, then make 9 more flation rate. You expect to ea eposits increasing at the in on your funds, and you expect a 3% inflation rte. To the nearest dollar, how large must your initial deposit be to a. $3,008 b, $3,676 c. $4,448 d. $4,044 e. S3,342 «. Moving to another question will save this response. F10 F9 F7 F5

Explanation / Answer

Answer e) is correct.

Use Goal Seek in the following table to determine the initial deposit. Start with $2,000 as the initial payment but this will change to $3,341.94 to get $ 50,000.

Period Deposit Future value-Deposit*(1+5%)^(10-period) 0 $        3,342 $            5,444 1 $        3,442 $            5,340 2 $        3,545 $            5,238 3 $        3,652 $            5,138 4 $        3,761 $            5,041 5 $        3,874 $            4,945 6 $        3,990 $            4,850 7 $        4,110 $            4,758 8 $        4,233 $            4,667 9 $        4,360 $            4,578 Total $         50,000

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