You would Ilike to have $59,000 in 5 years for the down payment on anew house following graduation by making deposits at the end of every threemonths in an annuity that pays 4.25% compounded quarterly. (a) How muchshould you deposit at the end of every three months? (b) How much of the$59,000 comes from deposits? (c) How much of the $59,000 comes frominterest? (Round UP to the nearest dollar. For example, $247)OPensyrooon21l 1e0(6)' s6Tei 0hccdoirdW (b)SaavizwDi26. 71 059.000 6 00

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Asked Oct 26, 2019
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You would Ilike to have $59,000 in 5 years for the down payment on a
new house following graduation by making deposits at the end of every three
months in an annuity that pays 4.25% compounded quarterly. (a) How much
should you deposit at the end of every three months? (b) How much of the
$59,000 comes from deposits? (c) How much of the $59,000 comes from
interest? (Round UP to the nearest dollar. For example, $247)
OPensyrooo
n
21
l 1e0
(6)' s
6Tei 0hcc
doirdW (b)Saaviz
wDi
26. 7
1 0
59.000 6 00
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You would Ilike to have $59,000 in 5 years for the down payment on a new house following graduation by making deposits at the end of every three months in an annuity that pays 4.25% compounded quarterly. (a) How much should you deposit at the end of every three months? (b) How much of the $59,000 comes from deposits? (c) How much of the $59,000 comes from interest? (Round UP to the nearest dollar. For example, $247) OPensyrooo n 21 l 1e0 (6)' s 6Tei 0hcc doirdW (b)Saaviz wDi 26. 7 1 0 59.000 6 00

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Expert Answer

Step 1

Note: No intermediate rounding is done, only the answer is rounded off to nearest whole number.

a) Down payment of a new house is $59,000 in the next 5 years. Payments are to be paid every three months with 4.25% interest compounded quarterly.

Therefore,

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Future Value (FV) $59000 Number of periods (n) Interest rate per peri od (r) 20 (since there are 4 quarters in a year) 5*4 = 4.25% /4 =1.0625%

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Step 2

Annuity payment every three months could be calculated as below:

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FVxr P (1+r)"- 59000x 0.010625 )- (10.010625 1 626.875 1.23538059-1 $2663.240907

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Step 3

Answer: At the end of every three years a deposit of $2663 ...

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