Suppose you need to have $40,000 to buy a new car in 8 years. You plan to raise this amount by investing $3,000 this year, $1,000 next year and then an equal amount each year from years 4 to 7.
Solve for the unknown amount you need to invest each year in years 4 to 7 if you expect to earn 7%.
(HINT: Consider bringing as many cash flows as you can to the same point in time). ON EXCEL