Question
Four years ago, a rich aunt set up a trust fund for you that paid $5,000 a year into a savings account. The trust fund
Four years ago, a rich aunt set up a trust fund for you that paid $5,000 a year into a savings account. The trust fund was to make 5 equal payments, with the last payment being today. You plan on making a $60,000 down payment on a house in 6 years. You will start saving for the house beginning in exactly one year from today. Your six annual deposits will grow by 4% per year. The last annual deposit will be on the day that you make the down payment on the house. You will combine the money accumulated from your aunts trust fund with the amount from your savings fund to make the down payment on the house. If the discount rate is 6% (annually compounded), what must the size of your first annual savings deposit be in order to have the $60,000 necessary for the down payment?
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