Eunice wants to have 500,000 on 12/31/2020.

Question

Eunice wants to have 500,000 on 12/31/2020. Eunice will deposit 100,000 on january 1,2016 and will make annual deposit every december 31 starting december 31,2016.
Int. Rate:10%
1. What is the annual deposit?
2. What is the fund balance on 12/31/17?

Answer 1

The annual deposit is $100,000 You can treat this as an ordinary annuity whose first deposit is made at the end of 2015 and the last deposit at the end of 2020. At the end of 2017 three years have passed so we have

 

PV = 0

PMT = $100,000

N = 3

i% = 10%

 

FV = $331,000