Use this information to answer the following question.
-If an accumulation of $16,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years,assuming an APR of 12 percent?
A)$4,742.15
B)$53,984.00
C)$11,387.90
D)$22,480.00

Question

Use this information to answer the following question.  
-If an accumulation of $16,000 is desired at the end of three years,what amount must be deposited at the end of each of the three years,assuming an APR of 12 percent?
A)$4,742.15 
B)$53,984.00 
C)$11,387.90 
D)$22,480.00

Quizplus · Accepted Answer

To find the amount that must be deposited at the end of each of the three years to accumulate $16,000, we use the future value of an ordinary annuity formula: $FV = P \times \left( \frac{(1 + r)^n - 1}{r} \right)$, where FV is the future value, P is the payment, r is the interest rate per period, and n is the number of periods. Rearranging the formula to solve for P gives us $P = FV \div \left( \frac{(1 + r)^n - 1}{r} \right)$. Plugging in the values (FV = $16,000, r = 0.12, n = 3), we find that the annual deposit required is approximately $4,742.15.

Use This Information to Answer the Following Question