Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul the engine on his vintage
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 2 years to overhaul the engine on his vintage used car.
\r\nWhile there is some uncertainty about the cost of engine overhauls in 2 years, by conducting some research online, Keith has developed the following estimates.
\r\nEngine Overhaul Probability
\r\nEstimated Cash Outfl ow Assessment
\r\n$200 10%
\r\n450 30%
\r\n600 50%
\r\n750 10%
\r\nInstructions
\r\nHow much should Keith Bowie deposit today in an account earning 6%, compounded annually, so that he will have enough money on hand in 2 years to pay for the overhaul?