Question

You plan on buying some property in Florida 5 years from today. To do​ this, you estimate that you will need ​$20 comma 000 at that time for the purchase. You would like to accumulate these funds by making equal annual deposits in your savings​ account, which pays 12 percent annually. If you make your first deposit at the end of this​ year, and you would like your account to reach ​$20 comma 000 when the final deposit is​ made, what will be the amount of your​ deposits?

Answer 1

Answer:

$3,148.19

Explanation:

Data given in the question

NPER = 5 years

Estimated amount at the time for purchase = $20,000

Rate of interest = 12%

So, by considering the above information

The amount of your deposit is

= (Estimated amount at the time for purchase × Rate of interest) ÷ (1 + rate of interest^time period - 1)

= ($20,000 × 12%) ÷ (1 + 0.12^5 - 1)

= ($240) ÷ 1.7623416832  - 1

= $240 ÷ 0.7623416832

= $3,148.19