SOLUTION: Is it now the beginning of the year (year 0). Assume that, starting at the end of the year 4 (NOT next year), you will make deposits of $193 each year into a savings account. You w

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Question 1118400: Is it now the beginning of the year (year 0). Assume that, starting at the end of the year 4 (NOT next year), you will make deposits of $193 each year into a savings account. You will make a total of 5 annual deposits. If the savings account interest rate is 11%, what is the present value of this savings plan?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!


you will make a total of 5 deposits of 193 at the end of each year starting at the end of year 4.

the savings account interest rate is 11% per year.

the present value of the money invested at the end of year 4 is equal to 193 / 1.11^4.

the present value of the money invested at the end of year 5 is equal to 193 / 1.11^5.

the present value of the money invested at the end of year 6 is equal to 193 / 1.11^6.

the present value of the money invested at the end of year 7 is equal to 193 / 1.11^7.

the present value of the money invested at the end of year 8 is equal to 193 / 1.11^8.

add them up and you get a present value of $521.56.

i did this in excel.

here's the results.

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