Six years from today you need $10,000. you plan to deposit $1,500 annually, with the first payment to be made a year from today,
in an account that pays an 8% effective annual rate. your last deposit, which will occur at the end of year 6, will be for less than $1,500 if less is needed to reach $10,000. how large will your last payment be?
We calculate the future value of the 6 annual deposits of $1500 at 8%: F=1500(1.08^6-1)/(0.08)=11003.89 Since the last payment is due on the day of withdrawal, he would have paid $1500 to get back $11003.89, i.e. with an excess of 1003.89. Therefore his last payment is 1500-1003.89=$496.11
