Question
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in4years to overhaul the engine
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in4years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in4years, by conducting some research online, Keith has developed the following estimates.
Engine Overhaul Estimated Cash Outflow | Probability Assessment | |
$210 | 10 | % |
510 | 30 | % |
770 | 50 | % |
750 | 10 | % |
(Use the tables below.)
How much should Keith Bowie deposit today in an account earning8%, compounded annually, so that he will have enough money on hand in4years 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.)
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