Assume that Adrian will need $30,000 for his 20 percent down payment in five years.If he locates an investment with a 9 percent rate of return that compounds annually,which of the following is closest to the amount that he will have to save each year?
A)$6,003
B)$4,884
C)$5,187
D)$5,013

Question

Quizplus · Accepted Answer

To find the amount Adrian needs to save each year, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Here, FV = $30,000, r = 0.09, and n = 5. Solving for Pmt gives approximately $5,013.

Assume That Adrian Will Need $30,000 for His 20 Percent