Question 2: (09)

Assume that 4 years from now you will need $1,000. Your bank compounds interest at an 8% annual rate.

a. How much must you deposit 1 year from now to have a balance of $1,000 at Year 4?(4.5)

b. If you want to make equal payments at the end of Years 1 through 4 to accumulate (4.5) the $1,000, how large must each of the 4 payments be?