Wednesday, August 17, 2011

Finance problem - Help required?

On January 1, 1991, a graduate student developed a 5-year financial plan which would provide enough money at the end of her graduate work (January 1, 1996) to open a business of her own. Her plan was to deposit $8,000 per year for 5 years, starting immediately, into an account paying 10 percent compounded annually. Her activities proceeded according to plan except that at the end of her third year (1/1/94) she withdrew $5000 to take to Caribbean cruise, at the end of the fourth year (1/1/95) she withdrew $5000 to buy a used prelude, and at the end of the fifth year (1/1/96) she had to withdraw $5000 to pay to have her dissertation typed. Her account, at the end of the fifth year, was less than the amount she had originally planned on by how much?

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