David wishes to accumulate $1 million by the end of 20 years by making equal annual end-of-yeardeposits over the next 20 years. If David can earn 10 percent on his investments, how much must hedeposit at the end of each year?

Question

Quizplus · Accepted Answer

To find the annual deposit, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Here, FV = $1,000,000, r = 0.10, and n = 20. Solving for Pmt gives approximately $17,460.

David Wishes to Accumulate $1 Million by the End of 20