Question

Solving for PMT of an annuity​) To pay for your​ child's education, you wish to have accumulated ​$ at the end of years. To do this you plan on depositing an equal amount into the bank at the end of each year. If the bank is willing to pay percent compounded​ annually, how much must you deposit each year to reach your​ goal?

Answer 1

Answer:

$783.87

Explanation:

Complete question "To pay for your​ child's education, you wish to have accumulated ​$10,000 at the end of 8 years. To do​this, you plan to deposit an equal amount into the bank at the end of each year. If the bank is willing to pay 13 percent compounded​annually, how much must you deposit each year to obtain your​goal?"

NPER = 8

FV = 10,000

Rate = 13%

PV = 0

Future Value of Annuity = PMT(Rate, NPER, PV, FV)

Future Value of Annuity = PMT(13%, 8, 10000, 0)

Future Value of Annuity = 783.8671964727014

Future Value of Annuity = $783.87

So, one must deposit $783.87 each year to reach the goal.