Question

M. Fields, Inc. wishes to accumulate $1,000,000 to be used to pay off a loan at the end of 10 years. How much will M. Fields deposit each year for 10 years, beginning at the end of the first year, to accumulate the desired amount if the investment earns an annual rate of 12%?

Answer 1

Answer:

c) $56,984

Explanation:

First, kindly find attached the completion of the question including the multiple choices below

Round your answer to the nearest dollar.

Select the appropriate factor for your calculation:

Future Value of $1: 3.10585

Future Value of an Annuity of an Ordinary Annuity: 17.54874

a) 45,586  b) $33,334  c) $56,984  d)$26,432

Solution

First, we pull out important information as follows

The future value of the accumulation is $1,000,000, therefore, the future value of the ordinary annuity (17.54874) will be used.

Secondly,we now need to calculate the amount to be invested now, to bring an accumulation of $1,000,000, which we call x

The future value= x ( Future Value of an Annuity of an Ordinary Annuity)

= 1,000,000 = x (17.54874)

= $1,000,000 = 17.54874x

x= $1,000,000 / 17.54874

The amount to invest = $56,984