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A. Use the appropriate formula to determine the periodic deposit.
B. How much of the financial goal comes from deposits and how much comes from​ interest?
Periodic Deposit: $? at the end of each year
Rate: 7​% compounded annually
Time: 18 years
Financial Goal: ​$130,000

The periodic deposit is? $

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Parrain

Answer:

A. Periodic deposit:

The goal is to make $130,000 by depositing a set amount every year.

This set amount is an annuity. The $130,000 is therefore the future value of the annuity after 18 years.

Future value of annuity = Annuity * Future value of annuity factor, 7%, 18 years

130,000 = Annuity * 33.9990

Annuity = 130,000 / 33.9990

= $3,823.64

B. Sources of the financial goal.

Money from deposits = Periodic deposit * no. of years

= 3,823.64 * 18

= $68,825.52

Money from interest:

= Financial goal - Money from deposits

= 130,000 - 68,825.52

= $61,174.48