Question
John Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 5 years to overhaul
John Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 5 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 5 years, by conducting some research online, John has developed the following estimates.
Engine Overhaul Estimated Cash Outflow | Probability Assessment | ||
---|---|---|---|
$340 | 10% | ||
480 | 30% | ||
840 | 50% | ||
750 | 10% |
Click here to view factor tables How much should John Bowie deposit today in an account earning 9%, compounded annually, so that he will have enough money on hand in 5 years to pay for the overhaul? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
Deposit amount | $enter the deposit amount in dollars rounded to 0 decimal places |
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