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27 November, 22:20

Rob Herndon, an accountant with Southwest Airlines, wants to retire 50% of Southwest Airlines bonds by 2038. Calculate the payment Rob needs to make at the end of each year at 6% compounded annually to reach his goal of paying off $300,000 in 20 years.

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  1. 28 November, 01:51
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    Annual deposit = $8,155.37

    Explanation:

    Giving the following information:

    Calculate the payment Rob needs to make at the end of each year at 6% compounded annually to reach his goal of paying off $300,000 in 20 years.

    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 = (300,000*0.06) / [ (1.06^20) - 1]

    A = $8,155.37
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