Question

Your company has decided that it will need $10,000 in 4 years to replace office equipment. You invest in a fund that pays 2..25% per year. How much do you need to put into this account every month to have enough money at the end of the 4 years? $10,000 $200.00 OOOO $208.33 $199.29

Answer 1

For this case we can use the future value annuity given by:

`A=P\cdot((1+(r)/(n))^(nt)-1)/((r)/(n))`

Where A= 10000 the amount needed, t= 4 years, n= 12 since the deposits are per month

And solving for P we got:

`P=(10000\cdot(0.0225)/(12))/((1+(0.0225)/(12))^(12\cdot4)-1)=199.29`

Then the final answer for this case would be:

199.29