(Expected Cash Flows and Present Value) Andrew Kelly 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, Andrew has developed the following estimates.

Instructions How much should Andrew Kelly 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?

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Engine Overhaul Estimated Cash Outflow Probability Assessment $200 10% 450 30% 550 50% 750 10%