1. Dana needs to make some house repairs in three years that will cost $8,000. She...

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Finance

1. Dana needs to make some house repairs in three years thatwill cost $8,000. She has some money in an account earning 6%annual interest. How much money needs to be in the account today soshe will have enough to pay for the repairs?
2. Unfortunately, Dana doesn't have enough money in her accountright now. She needs to make additional contributions at the end ofeach of the next three years to be able to pay for the repairs. Heraccount currently has $3,500, which, along with her additionalcontributions, is expected to continue earning 6% annual interest.If she makes equal contributions each year, how large must eachcontribution be for Dana to have $8,000 after three years?

Answer & Explanation Solved by verified expert

4.1 Ratings (810 Votes)

1 Expected Future Requirement 8000Interest rate 6 pa r n3Future Value Present Principal 1rn8000 P 10063P 8000 10063 671695 6717Approx required for her to meet the repair infuture2Amount available in her account now3500After three years See Answer

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