Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}
\text { Future Value of Ordinary Annuity of } \
\$ 1 \text { at } 12 \text { Percent }
\end{array} \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$
If an accumulation of $6,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years?

Question

Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}
\text { Future Value of Ordinary Annuity of } \
\$ 1 \text { at } 12 \text { Percent }
\end{array} \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$
 If an accumulation of $6,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years?

Quizplus · Accepted Answer

The future value of an ordinary annuity is the sum of the future values of each individual payment. In this case, we want the future value to be $6,000 at the end of three years. Using the formula for the future value of an ordinary annuity, we can solve for the amount that must be deposited at the end of each year:FV = PMT * [(1 + r)^n - 1] / rwhere:FV is the future valuePMT is the payment amountr is the interest raten is the number of periodsPlugging in the values we know, we get:6,000 = PMT * [(1 + 0.12)^3 - 1] / 0.126,000 = PMT * 3.374PMT = $1,778.30Therefore, the amount that must be deposited at the end of each of the three years is $1,778.30.

Use This Information to Answer the Following Question If an Accumulation of $6,000 Is Desired at the End