Future Value of An Ordinary Annuity(Accounting)

User Generated

whfgrsvaarl

Business Finance

Description

Steve Madison needs $250,000 in 10 years. (Use the tables below.)


How much must he invest at the end of each year, at 11% interest, to meet his needs?

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Explanation & Answer

 we're doing is investing the same amount each year for 10 years in order to get 250,000. We can do this with a summation calculation: 

250000 = P * sum(1.11^t , t , 1, 10) 
250000 = P * 18.56142995033279434701 
13468.78988682214447947746249065 = P 

Roughly 13,469 dollars per year.


Anonymous
Just the thing I needed, saved me a lot of time.

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