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Dr. J. wants to buy a Dell computer which will cost S2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. I le can earn 7% annual return. How much should he set aside? a. $531.81 b. $697.00 $627.93 d SR71 15
Answer
c.
Explanation
Computation of Equal Annual Payment using PMT Function in Excel:
=pmt(rate,nper,-pv,fv)
Here,
PMT = Equal Annual Payment = ?
Rate = 7%
Nper = 4 Years
PV = 0
FV = $2,788
Substituting the values in formula:
=pmt(7%,4,0,-2788)
PMT or Equal Annual Payment = $627.94 or $627.93
