Ask Experts Questions for FREE Help !
Ask
    asbreeden's Avatar
    asbreeden Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 14, 2010, 08:48 PM
    Finance question.
    You want to have $34,000 in your savings account 12 years from now. You're prepared to make equal annual deposits in the account at the end of each year. If the account pays 7% interest, what amount must you deposit each year?
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
    		  
    #2

    Oct 15, 2010, 05:00 AM
    One needs to invest $1,776.35 per year.

    WORKINGS:-

    YEAR AMT INVEST BALANCE

    1 1,776.35 1,900.69
    2 3,677.04 3,934.44
    3 5,710.79 6,110.54
    4 7,886.89 8,438.98
    5 10,215.33 10,930.40
    6 12,706.75 13,596.22
    7 15,372.57 16,448.65
    8 18,225.00 19,500.75
    9 21,277.10 22,766.50
    10 24,542.85 26,260.85
    11 28,037.20 29,999.80
    12 31,776.15 34,000.48


    Rolcam 101015.
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #3

    Oct 18, 2010, 09:45 AM
    I'm with you, ROLCAM, that 1,776.35 gets the job done, if we can assume that the initial deposit is made immediately, the second is made one year from today,. and finally the last deposit is made 11 years from today (and thus is made one year prior to the 12-year deadline). If so, you've certainly got 34,000 in the kitty 12 years from now.

    I'm concerned, though, with the "at the end of each year" part of the question (emphasis mine). If Deposit #1 is made one year from today, and the final one is made 12 years from today, then it'll take annual deposits of 1,900.67 to hit the target upon the final deposit.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Business Finance Question [ 3 Answers ]

You are 40 years old and plan to retire in exactly 20 years. Starting 21 years from now you will need to with draw $5,000 per year from your retirement fund to supplement your social security payment. If you expect to live to age eighty-five how much should you place in the retirement fund each...

Finance Excel Question [ 5 Answers ]

I am creating a worksheet for a "bond calculator" as assigned. I have calculated Price using the PV formula, Interest on Interest plus Coupon using the FV formula, and expected price at the end of Investment Horizon. I am asked to compute total future dollars but I am not sure if this is the same...

Finance Question [ 2 Answers ]

Calculating the number of payments: Your're prepared to make monthly payments of 125, beginning at the end of this month, into an account that pays 10% interest compnounded monthly. How many payments will you have made when your account balance reaches 20,000. I know you solve for t but I get...

View more questions Search