Question

The Kellys are planning for a retirement home. They estimate they will need $200,000 4 years from now to purchase this home. Assuming an interest rate of 10%, what amount must be deposited at the end of each of 4 years to fund the home price? (Round to two decimal places.)

Answer 1

	Answer
	Let suppose yearly amount to be deposited= K
YEAR	Opening balance(O.B.) (a)	Yearly amount Deposited (b)	Interest 10%XO.B. (c)	Closing Balance (a+b+c)
1	-	K	-	K
2	K	K	0.1 K	2.1K
3	2.1K	K	0.21K	3.31K
4	3.31K	K	0.33K	4.64K
	Now,
	4.64 K = $ 200,000
	K = $ 200,000/4.64
	=   $43,103.45
Since yearly amount of $ 43,103.45 should be deposited to get
$ 200,000 at end of 4 year with interest rate of 10 % yearly.
Please feel free to ask if anything about above solution in comment section of the question.