A man has purchased a new automobile. He wishes to set aside enough money in a bank account to pay the maintenance on the car for the first 5 years. It has been estimated that the maintenance is as follows: Year 1 the maintenance cost = $120 Year 2 the maintenance cost = $150 Year 3 the maintenance cost = $180 Year- 4 the maintenance cost =$210 Year- 5 the maintenance cost =$240. Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest. How much should the car owner deposit in the bank now? Also, give the following given: G = ? A/G = ? Atotal = ? Pototal = ?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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please show the cash flow diagram and complete given and solution. thank you

A man has purchased a new automobile. He wishes to set aside enough money in a bank account
to pay the maintenance on the car for the first 5 years. It has been estimated that the maintenance
is as follows:
Year 1 the maintenance cost = $120
Year 2 the maintenance cost = $150
Year 3 the maintenance cost = $180
Year- 4 the maintenance cost =$210
Year- 5 the maintenance cost =$240.
Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest.
How much should the car owner deposit in the bank now?
Also, give the following given:
G = ?
A/G = ?
Atotal = ?
Pototal = ?
Transcribed Image Text:A man has purchased a new automobile. He wishes to set aside enough money in a bank account to pay the maintenance on the car for the first 5 years. It has been estimated that the maintenance is as follows: Year 1 the maintenance cost = $120 Year 2 the maintenance cost = $150 Year 3 the maintenance cost = $180 Year- 4 the maintenance cost =$210 Year- 5 the maintenance cost =$240. Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest. How much should the car owner deposit in the bank now? Also, give the following given: G = ? A/G = ? Atotal = ? Pototal = ?
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