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You want to have $51,554 in your savings account 8 years from now, and you're prepared...

You want to have $51,554 in your savings account 8 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 5 percent interest, what amount must you deposit each year?

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Answer #1

Given,

Future value = $51554

Number of years (n) = 8 years

Interest rate (r) = 5% or 0.05

Solution :-

Annual deposit = (Future value x r) [(1 + r)n - 1]

= ($51554 x 0.05) [(1 + 0.05)8 - 1]

= $2577.70 [(1.05)8 - 1]

= $2577.70 [1.47745544378 - 1]

= $2577.70 0.47745544378 = $5398.83

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