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1 December, 17:25

You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?

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  1. 1 December, 17:50
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    FV = $12,818.4

    Explanation:

    Giving the following information:

    You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest.

    To calculate the future value we need to use the following formula:

    FV = {A*[ (1+i) ^n-1]}/i

    A = annual deposit

    FV = {4,200*[ (1.052^2) - 1]}/0.052 + 4,200 = $12,818.4
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