Question

David and Heien Zhang are saving to buy a bout at the end of five years If the boat conts 529000 and ticy cincent yon a rea in their savings. how much do they neyed to put aside at the end of years 1 theough 5 ? (Do not round intermedirie calcialestions pound your answer to 2 decimal ploces.)

Answer 1

To find out how much David and Heien Zhang need to put aside at the end of years 1 through 5 to buy a boat, we can use the formula for compound interest. By substituting the values and calculating the amounts year by year, we can determine the savings required for each year.

Step-by-step explanation:

To find out how much David and Heien Zhang need to put aside at the end of years 1 through 5, we can use the formula for compound interest. The formula is given by:

• Amount: The final amount of money needed
• Principal: The initial amount of money
• Interest Rate: The rate at which the money is growing
• Time: The number of years

In this case, the principal is the amount they need to put aside at the end of each year. The interest rate and time are fixed, so we just need to substitute the values and calculate the amounts. Let's do it step-by-step:

1. Year 1: Amount = Principal x (1 + 0.07)^1 = 529000 x (1 + 0.07) = $565030
2. Year 2: Amount = Principal x (1 + 0.07)^2 = 529000 x (1 + 0.07)^2 = $603859.49
3. Year 3: Amount = Principal x (1 + 0.07)^3 = 529000 x (1 + 0.07)^3 = $646475.82
4. Year 4: Amount = Principal x (1 + 0.07)^4 = 529000 x (1 + 0.07)^4 = $693049.20
5. Year 5: Amount = Principal x (1 + 0.07)^5 = 529000 x (1 + 0.07)^5 = $743895.01

Therefore, David and Heien Zhang need to put aside $565030 at the end of Year 1, $603859.49 at the end of Year 2, $646475.82 at the end of Year 3, $693049.20 at the end of Year 4, and $743895.01 at the end of Year 5.