Question

Acme annuities recently offered an annuity that pays 5.7% compounded monthly what equal monthly deposit should be made into this annuity in order to have 190,000 in 9 years

Answer 1

To have $190,000 in 9 years with a 5.7% interest rate compounded monthly, you should make an equal monthly deposit of $1,407.67.

Step-by-step explanation:

To determine the equal monthly deposit needed to have $190,000 in 9 years with a 5.7% interest rate compounded monthly, we can use the formula for the future value of an annuity:

FV = P * ((1 + r)^nt - 1) / r

Where FV is the future value, P is the monthly deposit, r is the interest rate per period (in decimal form), n is the number of periods, and t is the total number of years.

Substituting the given values, we have:

FV = P * ((1 + 0.057/12)^(12*9) - 1) / (0.057/12)

FV = P * (1.00475^108 - 1) / 0.00475

190,000 = P * (1.6386 - 1) / 0.00475

190,000 = P * 0.6386 / 0.00475

P = 190,000 * 0.00475 / 0.6386

P = $1,407.67

Therefore, an equal monthly deposit of $1,407.67 should be made into the annuity.