Sara has just graduated from college. She has determined that to purchase a home in 13 years she needs to accumulate $23,900 for a down payment. If Sara can earn 6% per year on her savings, what is the amount of the annual annuity payment that Sara must make at the end of each year for 13 years?

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Business

Franklin Arroyo

14 January, 00:38

Sara has just graduated from college. She has determined that to purchase a home in 13 years she needs to accumulate $23,900 for a down payment. If Sara can earn 6% per year on her savings, what is the amount of the annual annuity payment that Sara must make at the end of each year for 13 years?

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Duffy · Answer 1

The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75

Explanation:

future value = $23900

FVA (6%,13) = ((1.06^13) - 1) / 0.06)

= 18.88214

amount of annuity payment = future value/FVA

= 23900/18.88214

= $1265.7464

Therefore, The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75