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How much should keith bowie deposit today

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Question - Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 2 years, by conducting some research online, Keith has developed the following estimates.

Engine Overhaul

Estimated Cash Outflow Probability Assessment

$200 10%

450 30%

600 50%

750 10%

How much should Keith Bowie deposit today in an account earning 6%, compounded annually, so that he will have enough money on hand in 2 years to pay for the overhaul? (Round the computation for expected cash flow to 0 decimal places and the final answer to 2 decimal places, e.g. 250.25. Hint: Use tables in text.)

Reference no: EM131822131

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