The atlantic Company needs to save $10 million to discharge a $10 million mortga

Question

The atlantic Company needs to save $10 million to discharge a $10 million mortgage loan(a kind of term loan) that matures on 31^st December 2023. To discharge this mortgage, the company plans to put a fixed amount into an account at the end of each year for 10 years, with the first payment occurring on 31^st December 2014. The Atlantic Company expects to earn 9% annually on the money in this account. What equal contribution must it make to this account to accumulate the $10 million by 31^st December 2023?

Explanation / Answer

we use pmt formuale to find the amount

pmt(rate,nper,pv,fv,type)

rate=9%

nper=10 years( dec 2014 to dec 2023)

pv=

fv=10mn

type=1

=PMT(9%,10,,10^7,0)

=$658,200.9

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