SOLUTION: Maria has set a goal to save $ 10 000 in a savings account that earns 2.4% compounded annually. How much must she deposit each year for five years if the deposits are made at the e
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Question 1207353: Maria has set a goal to save $ 10 000 in a savings account that earns 2.4% compounded annually. How much must she deposit each year for five years if the deposits are made at the end of each year?
Answer by mananth(16946) (Show Source): You can put this solution on YOUR website!
use the formula for the future value of a series of payments, compounded annually.
The formula is:
FV = P * ((1 + r)^n - 1) / r
FV is the future value of the annuity =$10,000),
P is the annual deposit,
r is the annual interest rate =0.024
n is the number of years 5 years
Rearrange the formula for P
P = FV * r / ((1 + r)^n - 1)
Plug the values
P = 10000 * 0.024 / ((1 + 0.024)^5 - 1
Use calculator to find the annual deposit
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