Question

How much money must you deposit into a savings account at the end of each year at 4% interest compounded annually in order to earn $9,778.08 interest during a 20-year period?

Answer #1

Amount = Principal * (1+ rate)^{time period}

[Principal + interest] = Principal * (1+ rate)^{time
period}

[Principal + 9778.08 ] = Principal * (1+ 0.04)^{20}

[Principal + 9778.08 ] = Principal * (1.04)^{20}

Principal + 9778.08 = 2.191123 principal

9778.08 = 1.191123 principal

Principle = 9778.08 / 1.191123

Principal = 8209.13

**Future value of ordinary annuity = payment*
[(1+rate) ^{number of payments} - 1] / rate**

*17987.21 = payments* [(1+0.04) ^{20} - 1] /
0.04*

*17987.21 = payments* [(1.04) ^{20} - 1] /
0.04*

*17987.21 = payments* [2.191123 - 1] / 0.04*

*719.49 = payments* [2.191123 - 1]*

*719.4884 = payments* 1.191123*

* $604.04 = payments*

**money must be deposited into a savings account at the
end of each year = $604.04**

**Note:-**** ****Future
value = 8209.13 + 9778.08**

**= $17987.21**

How much money must you deposit into a savings account at the
end of each year at 5% interest compounded annually in order to
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Please show your work and an explanation for your answer. Thank
you!

You want to deposit an equal amount of money every year at the
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