Question

Sara has just graduated from college. She has determined that to purchase a home in 13 years she needs to accumulate $23,900 for a down payment. If Sara can earn 6% per year on her savings, what is the amount of the annual annuity payment that Sara must make at the end of each year for 13 years?

Answer 1

The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75

Step-by-step explanation:

future value = $23900

FVA(6%,13) = ((1.06^13) - 1)/0.06)

= 18.88214

amount of annuity payment = future value/FVA

= 23900/18.88214

= $1265.7464

Therefore, The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75