A company that manufactures purgeable hydrogen sulfide monitors will make deposits such that each one is 7% larger than the preceding one. How large must the first deposit at the end of year 1 be if the deposits extend through year 10 and the fourth deposit is $5550? Use an interest rate of 10% per year.

What will be an ideal response?


Decrease deposit in year 4 by 7% per year for three years to get back to year 1.
First deposit = 5550/(1 + 0.07) 3
= $4530.45

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