Question

Your goal is to have $7,500 in your bank account by the end of six years. If the interest rate remains constant at 8% and you want to make annual identical deposits, how much will you need to deposit in your account at the end of each year to reach your goal? (Note: Round your answer for PMT to two decimal places.) $1,022.37 $1,226.84 $1,124.61 $817.90

Answer 1

Answer:

$1,022.37

Explanation:

We need to sovle for the quota which genereated a futute value of 7,500 dollars after 6 years assuming a constant 8% interest rate.

$FV \div \frac{(1+r)^{time} - 1 }{rate} = C$  

FV  $7,500.00  

time            6 years

rate            0.08

$7500 \div \frac{(1+0.08)^{6} -1 }{0.08} = C$  

C  $ 1,022.365