Trish needs to have $20,000 one year from now.She plans to make 9 equal monthly deposits,first deposit made today.What is the size of each deposit needed if the money is deposited into an account paying j₁₂ = 6%? A)$2135.12 B)$2145.80 C)$2156.53 D)$2178.15

Question

Quizplus · Accepted Answer

The future value of an annuity is given by the formula:FV = PMT * [(1 + r/n)^(n*t) - 1] / (r/n)where:PMT is the payment amountr is the annual interest raten is the number of compounding periods per yeart is the number of yearsIn this case, we have:FV = $20,000r = 6% = 0.06n = 12 (monthly compounding)t = 1 yearSubstituting these values into the formula, we get:$20,000 = PMT * [(1 + 0.06/12)^(12*1) - 1] / (0.06/12)Solving for PMT, we get:PMT = $2135.12Therefore, the size of each deposit needed is $2135.12.

Trish Needs to Have $20,000 One Year from Now