Question

David wishes to accumulate $1million by the of 20 years by making equal anual end of year deposits over the next 20 years if david can earn 10%on his envestment how much he deposit at the end of each year

Answer 1

Step-by-step explanation:

We can use the formula for calculating the future value of an annuity to determine the amount that David needs to deposit each year. The formula is:

A = F / ( (1 + r)^n - 1) / r

where:

A is the annual deposit

F is the future value ($1 million)

r is the interest rate (10%)

n is the number of years (20)

Plugging in the values, we get:

A = 1000000 / ( (1 + 0.1)^20 - 1) / 0.1

A = $38,851.68

Therefore, David needs to deposit $38,851.68 at the end of each year for 20 years to accumulate $1 million.