You want to have $44,000 in your savings account 10 years from now, an

QUESTION

You want to have $44,000 in your savings account 10 years from now, and youre prepared to make equal annual deposits into the account at the end of each year. If the account pays 5.1 percent interest, you must deposit $ _________ each year
Calculating Monthly Deposit Amount(PMT): (Using Ms-Excel “PMT”Function): Interest Rate (Rate) 5.10% Number of Periods (Nper) 10 Future Value of Deposit Amount(FV) -$44,000 Monthly Deposit Amount(PMT) $3,481.91 [OR] FV = C * [(1 r) t -1] / r $44,000 = C *[(1 0.051) 10 1] / 0.051 $44,000 = C * [(1.051) 10 1] / 0.051

$44,000 = C * [1.644474564 1] /0.051 $44,000 = C * [0.644474564 /0.051] $44,000 = C * 12.636756 C * 12.636756 = $44,000 Monthly Deposit Amount (C ) =[$44,000 / 12.636756] Monthly Deposit Amount (C )= $3,481.91

ANSWER:

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