Computation of the value of the annuity payment and would, Ask an Expert

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Computation of the value of the annuity payment

Suppose you have decided to start saving money to buy a motorcycle for your loving spouse40thbirthday, which is five years away. You estimate the amount you will have to pay at that timewill be $6,000. The savings account you established for the gift offers 16% per annum interest compounded quarterly.

How much would you have to deposit each year if your first deposit is made now and the final deposit is made one year before the motorcycle is purchased?

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