Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years. Assuming Betty can earn 10 percent over this period, how much must she deposit at the end of each year?
A)$18 560
B)$22 000
C)$14 760
D)$17 460

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.

Betty Wants to Accumulate $1 Million by the End of 20