Rico Co. plans to retire $12 million in bonds in six years, so it wishes to...
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Rico Co. plans to retire $12 million in bonds in six years, so it wishes to create a fund by making equal investments at the beginning of each year during that period in an account it expects to earn 6% annually. What amount does Rico need to invest each year?
Homework Answers
Future value of annuity due=(1+rate)*Annuity[(1+rate)^time period-1]/rate
12,000,000=1.06*Annuity[(1.06)^6-1]/0.06
12,000,000=Annuity*7.39383765
Annuity=12,000,000/7.39383765
which is equal to
=$1,622,973.15(Approx).
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