How much will Clarence have to invest at the end of every year at 11% compounded annually if he is going to accumulate $25,000 in five years?

Question

Quizplus · Accepted Answer

To find the annual investment needed, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Solving for Pmt, we get Pmt = FV / [(1 + r)^n - 1] / r. Plugging in FV = $25,000, r = 0.11, and n = 5, we find Pmt ≈ $4,014.25.

How Much Will Clarence Have to Invest at the End