Question

Detrich Products is planning to upgrade an aging manufacturing operation five years from now at a cost of $100,000. If the company plans to deposit money into an account each year for four years beginning two years from now (first deposit is in year 2) to pay for the expansion, the amount of the deposit at 10% per year interest is closest to

Answer 1

$21,547.08

Step-by-step explanation:

To get the amount of the deposit, we use the PMT function of MS Excel

Rate = 10%

Nper = 4

Pv = 0

FV = -100000

PMT = ?

The amount of the deposit = PMT(Rate, Nper, PV, -FV)

The amount of the deposit = PMT(10%, 4, 0, -100000)

The amount of the deposit = 21547.08037

The amount of the deposit = $21,547.08

So, the amount of the deposit at 10% per year interest is closest to $21,547.08