3) Solve the problem.
2 answers:
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Answer:
845.6306
Step-by-step explanation:
Firstly this is annuity based
Let, investment at beginning of year = <em>x</em>
Then value at year 1 end = x + (8.2% x)
Value at end of year 2 = (x + 0.082x) + (8.2% (x + 0.082x))
Now this value = $990
Therefore,
990 = (x + 0.082x) + ((x + 0.082x) 8.2%)
990 = x + 0.082x + 0.082x + 0.006724x = 1.170724x
x = 990/1.170724 = 845.6306