You would like to have 45,00 in 11 years. To accumulate this you plan to deposit

Question

You would like to have 45,00 in 11 years. To accumulate this you plan to deposit an equal amount each year which would earn 5% interest compounded. The first payment will be made at the end of the year.

How much must be deposited?

If you decide to make a large deposit instead of annual deposits, how much should that be?

At the end of 4 years you will receive $12,000.You will deposit this in the bank towards the 45,000.In addition to this deposit how much more must be deposited to reach the goal of45,000 at 5% interest?

Explanation / Answer

using Excel spread sheet type in the funtion dialog box to get the answer

a) =PMT(0.05,11,0,4500) you will get 316,75 $

B) =PV(0.05,11,0,4500) you will get $2,631.06

C) since 12,000 we are gettting so we need the fv value as 33,000 so type in funtion box as"=PV(0.05,4,0,33000)" we will get the answer $27149.18

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