Six equal annual contributions are made to a fund, with the first deposit on December 31, 2019. Required: Using the future value tables, determine the equal contributions that, if invested at 10% compounded annually, will accumulate to a fund of $30,000 on December 31, 2024.

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Kimberly Lara

5 July, 11:23

Six equal annual contributions are made to a fund, with the first deposit on December 31, 2019. Required: Using the future value tables, determine the equal contributions that, if invested at 10% compounded annually, will accumulate to a fund of $30,000 on December 31, 2024.

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Waylon Allen · Answer 1

The answer is $3,888.22

Explanation:

This is an annuity due because the cash flow is being done on the first day of each period.

Annuity is a fixed sum of money paid to or receceived from someone or business every year.

Future Value (FV) = $30,000

Interest rate (i or I/Y) = 10%

Number of years (N) = 6 years

Annuity (PMT) = ?

Using a Financial calculator to solve it (Texa BA II Plus)

Annuity (equal contributions) will be $3,888.22