Question

You want to have $90,000 in your savings account 10 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.8 percent interest, what amount you must deposit each year?

Answer 1

Answer:

$6,576

Explanation:

FV = $90,000. This is the saving amount in 10 years from now

i/r = 6.8%. The interest that the account pays

n = 10 years

PV = 0

PMT (The amount of annual deposit required to achieve the savings goal. This is the missing value we need to calculate)

By using financial calculator, we obtain:

PMT = $6,576