Question
(5 points) Jim needs to purchase an item in 10 years. The item costs 200 today, but its price inflates 4% per year. To finance
(5 points) Jim needs to purchase an item in 10 years. The item costs 200 today, but its price inflates 4% per year. To finance the purchase, Jim deposits 20 into an account at the beginning of each year for 6 years. He deposits an additional X at the beginning of years 4, 5, and 6 to meet his goal. The effective annual interest rate is 10%. X is solution to the equation: (a) 205 (1.1) + (20+X) (1.1)5 = 200(1.04) 10 (b) 205 (1.1) + (20+X) (1.1)4 = 200(1.04) 10 (c) 20s (1.1)+Xs (1.1)4 = 200(1.04)10 (d) 205 (1.1) + X5 (1.1)5 = 200(1.04) 10 (e) 20s (1.1)+Xs(1.1)=200(1.04)10
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