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Sara has just graduated from college. She has determined that to purchase a home in 13 years she needs to accumulate $23,900 for a down payment. If Sara can earn 6% per year on her savings, what is the amount of the annual annuity payment that Sara must make at the end of each year for 13 years?

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Karabo99

Answer:

The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75

Explanation:

future value = $23900

FVA(6%,13) = ((1.06^13) - 1)/0.06)

                   = 18.88214

amount of annuity payment = future value/FVA

                                               = 23900/18.88214

                                               = $1265.7464

Therefore, The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75

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