Homework Answers
ANSWER FOR THIS SOLUTION IS OPTION A) $29,222
SOLUTION:
GIVEN IN THE PROBLEM - a) FUTURE VALUE OF SAVINGS(FV) = $825,000
b) RATE OF RETURN (r)= 8.5%
c) PERIOD(n) = 15 YEARS
d) SERIES OF ANNUAL PAYMENTS(ANNUITY) AT THE END OF EACH YEAR(C) = ?
FORMULA
FV = C*[(1+r)n - 1 / r]
825000 = C * [(1+.085)15 - 1 / .085]
825000= C* [(1.085)15-1/.085]
825000= C*[(3.3997-1)/.085]
825000= C*[2.3997/.085]
825000= C*28.2318
C=825000/28.2318
C= $ 29,222
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