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22 September, 15:11

Xavier deposits $6 daily into an interest-bearing account to save for renovations to his bathroom. The account earns 4.57% which compounds annually. What is the present value of the investment if Xavier renovates his bathroom in five years

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  1. 22 September, 17:55
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    Xavier's deposit's present amount can be computed using the formula of the annuity.

    Present worth = Uniform payment[ (1+i) ^n-1] / (i (1+i) ^n

    where

    Uniform payment = $6 x 365 = $2190

    i = 4.57%

    n = 5

    Substitute all the given values, we will get

    Present worth = $9595.32

    The present worth of Xavier's deposit for bathroom renovation would be $9595.32.
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