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August Street, Inc. wants to have $3,000,000 in an account exactly 15 years from today. They...

August Street, Inc. wants to have $3,000,000 in an account exactly 15 years from today. They will make equal quarterly payments of $20,000 beginning next quarter and ending in 15 years. The account earns 8.00% p.a., compounded quarterly. August Street must have $_____ in its account today. Please post showing the steps in a financial calculator

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Answer #1

Future Value of Annuity = Amount*[{(1+r)n – 1}/r]

= 20,000*[{(1.02)60 – 1}/0.02]

= $2,281,030.79

Difference in Amount = 3,000,000 – 2,281,030.79

= $718,969.21

Amount required today = 718,969.21/(1.02)60

= $219,129.07

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