Mr. Chips, Inc. wishes to accumulate $2,000,000 to be used to pay off a loan at the end of 10 years.
How much will Mr. Chips deposit each year for 10 years (rounded to the nearest dollar), beginning at the end of the first year, to accumulate the desired amount if the investment earns an annual rate of 6%?
A) $151,736
B) $143,147
C) $259,215
D) $200,000

Question

Quizplus · Accepted Answer

Future value of an annuity factor at n = 10, I = 6%
PMT = $2,000,000 / 13.18079 = $151,736 (rounded)
Financial calculator:
N = 10 I/Y = 6 PMT = ? PV = 0 FV = 2,000,000
PMT = 151,736

Mr Chips, Inc