Answer:
annual savings = future value / [(1 + r)ⁿ - 1 ] / n
annual savings = $3,000,000 / [(1 + 0.1)¹⁰ - 1 ] / 0.1
annual deposit = $188,236.18
Explanation:
this is an ordinary annuity
future value = $3,000,000
interest rate = 10%
periods = 10
using the future value of an annuity formula, annual deposit = future value / annuity factor
FV annuity factor, 10 periods, 10% = 15.937
annual deposit = $3,000,000 / 15.937 = $188,241.20
instead of using annuity factors, you can solve this equation:
annual deposit = future value / [(1 + r)ⁿ - 1 ] / n
annual deposit = $3,000,000 / [(1 + 0.1)¹⁰ - 1 ] / 0.1
annual deposit = $188,236.18
Both answers are very similar, the difference is only 0.00267%
