Deposits to accumulate future sums For the case shown in the following table, de

Question

Deposits to accumulate future sums For the case shown in the following table, determine the amount of the equal, annual, end-of-year deposits necessary to accumulate the given sum at the end of the specified period, assuming the stated annual interest rate. (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet) Sum to be accumulated 57.200 Accumulation period (years) 13 Interest rate 11% The amount of the end-of-year annual deposit is s(Round to the nearest cent )

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hemce

57200=P(1.11)^12+P(1.11)^11+P(1.11)^10+..........+P(1.11)^1+P

57200=P[1.11^12+1.11^11+1.11^10+..........+1.11^1+1]

57200=P*26.21163784

P=57200/26.21163784

=$2182.24(Approx).

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