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Calculate the equal annual end of year amount needed to accumulate a given sum of $100,...

Calculate the equal annual end of year amount needed to accumulate a given sum of $100, 000 in 20 years if interest rate is 7%.

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Answer #1

Ans:- In this question, we need to find the annual annuity or payment which needs to deposit to accumulate $100,000 in 20 years at an interest rate of 7%.we will use excel PMT function to find the answer easily.

Therefore the annual Payment needed is $2439.29.

Note:- By Formula Method PMT is given by FV / [ ((1+r)^n - 1) / r], where FV is the future value,r is the rate, and n is the number of periods.

PMT = $100000 / [((1+0.07)^20-1) / 0.07] = $100000 / 41 = $2439.29.

Note:- If this answer helps you pls give thumbs up.

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