Question & Answer: Steve Madison needs $392,300 in 10 years. (Use the tables below.)…..

Brief Exercise 6-6

Steve Madison needs $392,300 in 10 years. (Use the tables below.)

Question & Answer: Steve Madison needs $392,300 in 10 years. (Use the tables below.)..... 1
Question & Answer: Steve Madison needs $392,300 in 10 years. (Use the tables below.)..... 2

How much must he invest at the end of each year, at 12% interest, to meet his needs? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Investment amount $Question & Answer: Steve Madison needs $392,300 in 10 years. (Use the tables below.)..... 3

Expert Answer

 

Future value required = $392,300

Number of years = n = 10

Annual interest rate = r = 12%

Future value of annuity of uniform amount = Annual deposits*{(1+r-n)-1}/r

$392,300 = Annual deposits*(1.1210-1)/0.12

$392,300 = Annual deposits *17.54874

Annual deposits = $392,300/17.54874 = $22,354.89

Still stressed from student homework?
Get quality assistance from academic writers!