Samuelson Engines wants to save $750,000 to buy some new equipment six years from now. The plan is to set aside an equal amount of money on the first day of each quarter starting today. The firm can earn 4.75 percent on its savings. How much does the firm have to save each quarter to achieve its goal?

Question

Quizplus · Accepted Answer

The correct answer is A.The firm needs to save $750,000 in six years, which is 24 quarters. The firm can earn 4.75 percent on its savings, which is 0.0475 per quarter. The firm needs to save $750,000 / 24 = $31,250 per quarter. The firm can earn 0.0475 * $31,250 = $1,484.38 per quarter on its savings. The firm needs to save $31,250 - $1,484.38 = $29,765.62 per quarter to achieve its goal.

Samuelson Engines Wants to Save $750,000 to Buy Some New