You borrowed S50000 which yo deposits at the beginning of ea

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

Solution

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