Question

Jared corp needs $900,000 for an expansion in 10 years. the company will make 10 equal annual deposits to fund this expansion. if the account earns 5% interest, how much does jared need to deposit each year?

Answer 1

The formula of the future value of an annuity ordinary is
Fv=pmt [(1+r)^(n)-1)÷r]
Fv 900000
PMT annual deposits ?
R interest rate 0.05
N time 10 years
Solve the formula for PMT
PMT=Fv÷[(1+r)^(n)-1)÷r]
PMT=900,000÷(((1+0.05)^(10)−1)
÷(0.05))
=71,554.12