Question

How much must be deposited at the beginning of each year to accumulate to $25,000 in two years if interest is at 9%?

Answer 1

$10,974.05

Step-by-step explanation:

Given that,

Amount to accumulated = $25,000 in two years

Interest rate = 9%

Let the amount be X,

Total amount after two years:

= Year 1 + Year 2

= X(1.09)^2 + X(1.09)

= 1.1881 X + 1.09X

= 2.2781 X

SO, Total amount after two years:

2.2781 X = 25,000

X = 25,000 ÷ 2.2781

= $10,974.05

Hence, the amount deposited at the beginning of each year is $10,974.