Homework Answers
a). Annual Deposit = [FV required * r] / [(1 + r)n - 1]
= [$20,000 * 0.10] / [(1 + 0.10)9 - 1]
= $2,000 / 1.3579 = $1,472.81
b). FV of Annuity Due = FV of Ordinary Annuity * (1 + r) = $20,000 * (1 + 0.10) = $22,000
Annual Deposit = [FV required * r] / [(1 + r)n - 1]
= [$22,000 * 0.10] / [(1 + 0.10)9 - 1]
= $2,200 / 1.3579 = $1,620.09
Change in annual deposit = $1,620.09 - $1,472.81 = $147.28
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