Question
Morgan Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 3 years to overhaul
Morgan Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 3 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 3 years, by conducting some research online, Morgan has developed the following estimates.
Engine Overhaul Estimated Cash Outflow Probability Assessment $370 10%, $610 30%, $720 50%, $830 10%
How much should Morgan Bowie deposit today in an account earning 9%, compounded annually, so that he will have enough money on hand in 4 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.)
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