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2 August, 05:24

Steve madison needs $250,000 in 10 years. how much must he invest at the end of each year, at 5% interest,

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  1. 2 August, 06:37
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    Calculation of amount of annuity:

    It is given that Steve Madison needs $250,000 in 10 years. And we are asked to find how much must he invest at the end of each year, at 5% interest. That means we are asked to find the annuity amount, which can be calculated as follows:

    Annuity = Future value / Future value of $1 Annuity

    Future value is $250,000

    And Future value of $1 Annuity (5%, 10 years using the Present value table) is 12.57789

    Hence, the Annuity = 250,000 / 12.57789 = 19,876.15

    Hence Steve Madison should invest $19,876.15 each year.
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