You need to accumulate $10,000. To do so, you plan to make deposits of $1,050 per year - with the first payment being made a year from today - into a bank account that pays 11% annual interest.

Problem 4-26 (Reaching a Financial Goal)

Reaching a Financial Goal

You need to accumulate $10,000. To do so, you plan to make deposits of $1,050 per year - with the first payment being made a year from today - into a bank account that pays 11% annual interest. Your last deposit will be less than $1,050 if less is needed to round out to $10,000.

How many years will it take you to reach your $10,000 goal? Do not round intermediate calculations. Round your answer up to the nearest whole number.

________year(s)

How large will the last deposit be? Do not round intermediate calculations. Round your answer to the nearest cent.

________$

Expert Solution

1.
Using financial calculator
PMT=-1050
FV=10000
I/Y=11%
PV=0
CPT N=6.86735888

It will take 7 years

2.
Using financial calculator
PMT=-1050
I/Y=11%
PV=0
N=6
CPT FV=8308.50

Last deposit required=10000-8308.50*1.11=777.565

jeff jeffy answered 2 years ago

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