Answered

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Henry Hitchcock is 40 years old today and he wishes to accumulate $497,000 by his 62 nd birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his 40 th through his 61 th birthdays. What annual deposit must Henry make if the fund will earn 9% interest compounded annually

Sagot :

facundobuzzetti

Answer:

Annual deposit= $7,904.78

Explanation:

Giving the following information:

Future Value (FV)= $497,000

Number of periods (n)= 22 years

Intesrest rate (i)= 9% compounded annually

To calculate the annual deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (497,000*0.09) / [(1.09^22) - 1]

A= $7,904.78

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