Drucci Corp, estimates it will need $2 million to pay for environmental cleanup costs on one...
Drucci Corp, estimates it will need $2 million to pay for environmental cleanup costs on one of its mines when the mines closes in six years. It wants to make six annual payments , starting today so that it can accumulate the $2 million at the end of six years. What is the amount of the annual payment if the funds can be invested at an 8% return?
Homework Answers
Future value of annuity due=(1+rate)*Annuity[(1+rate)^time period-1]/rate
2,000,000=1.08*Annuity[(1.08)^6-1]/0.08
2,000,000=Annuity*7.92280336
Annuity=2,000,000/7.92280336
=$252435.9(Approx).
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Drucci Corp, estimates it will need $2 million to pay for
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