Question

Unfortunately, Yasmin doesn't have enough money in her account right now. She needs to make additional contributions at the end of each of the next four years to be able to pay for the repairs. Her account currently has $4,000, which, along with her additional contributions, is expected to continue earning 7% annual interest. If she makes equal contributions each year, how large must each contribution be for Yasmin to have $9,000 after four years? A. $1,085 B. $487 C. $1,203 D. $846 E. $417

Answer 1

Step-by-step explanation:

Future value of 4000 at 7% after 4 years = 5243

rest amount = 9000 - 5243

= 3757

This amount is to be accrued through annuity .

future value of annuity 846 at 7% after 4 years

= 3756.19 = 3757

so required annuity = 846