You want to have $61,000 in your savings account 4 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.9 percent interest each year, what amount must you deposit each year? NOTE: You are exchanging cash today for a series of cash flows. This is an annuity problem (chapter 6) where we the value of the annuity is defined at the END of all the cash flows, so use the future value of an annuity equation, FVA C(1+r)-1 You already know what the annuity is targeted to be worth in the future (FVA), the number of payments (N), as well as the discount rate (r). You only need to calculate C, the size of the cash flow. =

You want to have $61,000 in your savings account 4 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.9 percent interest each year, what amount must you deposit each year? NOTE: You are exchanging cash today for a series of cash flows. This is an annuity problem (chapter 6 ) where we the value of the annuity is defined at the END of all the cash flows, so use the future value of an annuity equation, FVA=Cr(1+r)N1. You already know what the annuity is targeted to be worth in the future (FVAr), the number of payments (N), as well as the discount rate (r). You only need to calculate C, the size of the cash flow