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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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  1. 14 January, 01:55
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    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
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