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How much must you deposit year from now

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Question - Assume that 4 years from now you will need $1,000. Your bank compounds interest at an 8% annual rate.

i. How much must you deposit 1 year from now to have a balance of $1,000 at Year 4?

ii. If you want to make equal payments at the end of Years 1 through 4 to accumulate the $1,000, how large must each of the 4 payments be?

iii. To help you reach your $1,000 goal, your father offers to give you $400 after 1 year. You will get a part time job and make 6 additional payments of equal amounts each 6 months thereafter. If all of this money is deposited in a bank which pays 8%, compounded semiannually, how large must each of the 6 payments be?

Reference no: EM132561898

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