Answer:
The amount is $8,461.33
Explanation:
Using the formula future value for an annuity:
FV = Annuity * Interest factor
From the scenario under study, we are basically looking for our annuity - a specific payments made at constant intervals.
It is thus believed that the annuity will be sustained to build up a fund of $90,000. This thus represents our Future Value of an annuity.
Using the formula so enlisted:
Remember, our interest is 8% compounded annually. It is important to obtain our interest factor using the annuity table.
From the annuity table, our interest factor is 10.63663
Hence, FV = n * interest factor
90,000 = n * 10.63663
N = 90,000/10.63663
N = $8,461.326 (where N represents the annuity)
