Neena wants to accumulate ?$18,000 in a fund earning? 3

Finance Apr 25, 2021

Neena wants to accumulate ?$18,000 in a fund earning? 3.6% compounded? semi-annually. How much must she deposit at the end of each year for eight? years?

Expert Solution

Computation of Annual Deposit using PMT Function in Excel:

=pmt(rate,nper,pv,-fv)

Here,

PMT = Annual Deposit = ?

Rate = 3.6%/2 = 1.8% compounded semiannually

Nper = 8 Years*2 = 16 Periods

PV = 0

FV = $18,000

Substituting the values in formula:

=pmt(1.8%,16,0,-18000)

PMT or Annual Deposit = $980.79

So, She must deposit $980.79 at the end of each year for eight years.

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