Accounting Homework?

Question

What is the payment each year I will have to make if I want to have $70,000 at the end of 8 years. Interest is compounded annually at 8%

Answer 1

Hi,
There’s a reduced formula when the compounding and payments are once a year. It’s this:
FV = P[1+i)^n -1]/i Where P is the payment and i is the interest.
Solving for P, we have.
P = (FV)i/[1+i)^n -1]
=(70000*.08)/[(1.08)^8 -1]
Use a calculator
P = 6581.03

FE

Answer 2

too bad they didnt have yahoo answers when i was in school