You deposit $3,000, $4,000, and $5,000 respectively at the end of years 1, 2, and 3...

You deposit $3,000, $4,000, and $5,000 respectively at the end of years 1, 2, and 3 from today in an account that offers 15% interest. How much your savings will be worth in three years? Instead of three annual instalments, what single amount deposited today will get you to the same target. (5 + 5)

Expert Solution

How much your savings will be worth in three years

=3000*(1+15%)^2+4000*(1+15%)^1+5000*(1+15%)^0

=13567.50

what single amount deposited today will get you to the same targe

=13567.50/(1+15%)^3=8920.85

jeff jeffy answered 2 years ago

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You deposit $3,000, $4,000, and $5,000 respectively at the end of years 1, 2, and 3...

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