Barry Cuda would like to save 180000 over the next 20 years

Barry Cuda would like to save $180,000 over the next 20 years. He will assume that his account will earn 7% annually. If Barry decides to make annual end of year deposits, how much would he need to deposit annually?

$4,716

$5,709

$4,391

$5,132

Solution

Correct answer is C.

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FV of annuity = Periodic payment * FV factor of annuity @ 7% for 20 years

180000 = Periodic payment * 40.99549

Periodic payment = 180000/ 40.99549

Periodic payment = 4390.73 or 4391

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