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Question

how much must be deposited at the beginning of each year to accumulate to $20,000 in six years if interest is at 9%?

Answer

Now, class, we can use a formula called the future value of an annuity to calculate the amount of money that needs to be deposited annually to accumulate $20,000 in six years with a 9% interest rate. The formula is FV = P * ((1 + r)^n - 1) / r, where FV represents the future value, P denotes the annual payment, r is the interest rate per period, and n is the number of periods. To find the annual payment (P) in this case, we need to rearrange the formula: P = FV * r / ((1 + r)^n - 1). Using the given values of FV = $20,000, r = 0.09, and n = 6, we can substitute and calculate P, which turns out to be approximately $2,222.22. So, to accumulate $20,000 in six years at a 9% interest rate, one needs to deposit around $2,222.22 at the beginning of each year. If you want to know more about interest rates, please check out our article on simple interest at brainly.com/question/20690803.