Jared corp needs $900,000 for an expansion in 10 years. the company will make 10 equal annual deposits to fund this expansion. if the account earns 5% interest, how much does jared need to deposit each year?
The formula of the future value of an annuity ordinary is Fv=pmt [(1+r)^(n)-1)÷r] Fv 900000 PMT annual deposits ? R interest rate 0.05 N time 10 years Solve the formula for PMT PMT=Fv÷[(1+r)^(n)-1)÷r] PMT=900,000÷(((1+0.05)^(10)−1) ÷(0.05)) =71,554.12
