Classify the financial problem. Assume a 6% interest rate compounded annually. What annual deposit is necessary...

Question

Question

Classify the financial problem. Assume a 6% interest rate compounded annually. What annual deposit is necessary to give $10,0

Answer 1

Answer #1

It is an ordinary annuity problem because there are yearly payments.

Future value of an ordinary annuity:

PMT FV = =*[(1 + r) - 1

10,000 = PMT ane * [(1 +0.06)5 - 1

10,000 = PMT - * 0.3382255776 0,06

10,000 = PMT *5.63709296

PMT = 10,000 5,63709296

PMT = 1,773.96

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Answer 2

Answer #2

Classify the financial problem. Assume a 5% interest rate compounded annually.

What annual deposit is necessary to give $10,000 in 3 years?

Answer 3

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