Chuck needs to purchase an item in 10 years. The item costs 200 today, but its price inflates at 4% per year. To finance the purchase, Chuck deposits 20 into an account at the beginning of each year for 6 years. He deposits an additional X at the beginning of years 4, 5, and 6 to meet his goal. The annual effective interest rate is 10%. Calculate X.
This is how i interpret the problem: You have 5 cash flows starting from 0 to 5 of $20. You also have 3 cash flows at t=4,5,6.
I used annuity due formula to shift former cash flow to year 6, and then accumulate it to year 10 by the 4 remaining years.
I used the same approach for the latter:
But this does not give me the right answer. Can someone please tell me what I'm doing wrong? Thanks in advance.