Answer: $9,479
Explanation:
The number of periods = 10 years * 4 quarters = 40 periods
Interest per quarter = 10%/4 = 2.5%
$168,000 has been deposited. The value of this cash after 10 years is;
= 168,000 ( 1 + 2.5%) ^ 40
= $451,090.72
Out of $1,090,000, the amount remaining is;
= $1,090,000 - 451,090.72
= $638,909.28
They need to deposit an annuity per quarter to get to $638,909.28.
Future Value of Annuity = Annuity * ([1 + I]^N - 1 )/I
638,909.28 = Annuity * [(1+0.025)^40 - 1] /0.025
638,909.28 = Annuity * 67.40255
Annuity = 638,909.28/67.40255
= $9,479
