Suppose that in four years you will need $1000.00. Your bank manages an interest rate of 8% compounded annually.

a. How much money must you deposit within one year to have a balance of $1,000.00 in year four?

b. If you wish to make equal payments at the end of years one through four to accumulate $1,000.00, what should be the amount of each of the four payments?

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Lets answer this question using the compound interest formula which is A P 1 rn nt where A is the am... View the full answer