The costs are paid at the end of each year

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Your dad has promised to buy you a car on your graduation day. The one condition is that he wants you to put away enough money to pay for the expected maintenance costs for the first five years. The costs are expected to be $1,000 the first year and to increase by $100 every year thereafter. Assume that the costs are paid at the end of each year and that the bank pays 5% interest compounded annually. The amount you should have in the bank by your graduation day is closest to:

Reference no: EM131020446

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