We can use a timeline to identify the cash flows from the investment as follows: i=8%...
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We can use a timeline to identify the cash flows from the investment as follows: i=8% Time Period 0 Cash Flow 2 PMT PMT 17 18 years PMT PMT FV = $6,000,000 STEP 2: Decide on a solution strategy In this case, we are trying to determine the annual payment of an ordinary annuity (PMT). We know the annual compound rate (), the future value of the annuity (FV), and the number of years the annuity lasts (n). We can find the payment using a mathematical formula, a financial calculator, or an Excel spreadsheet. (Annuity payments) The Aggarwal Corporation needs to save $6 million to retire a(n) 56 million mortgage that matures in 18 years. To retire this mortgage, the company plans to put a fixed amount into an account at the end of each year for 18 years. The Aggarwal Corporation expects to earn 8 percent annually on the money in this account. What equal annual contribution must the firm make to this account to accumulate the $6 million by the end of 18 years? The equal annual contribution the firm must make to this account is $ 219164.08 (Round to the nearest cent.) We can use a timeline to identify the cash flows from the investment as follows: i=8% Time Period 0 Cash Flow 2 PMT PMT 17 18 years PMT PMT FV = $6,000,000 STEP 2: Decide on a solution strategy In this case, we are trying to determine the annual payment of an ordinary annuity (PMT). We know the annual compound rate (), the future value of the annuity (FV), and the number of years the annuity lasts (n). We can find the payment using a mathematical formula, a financial calculator, or an Excel spreadsheet. (Annuity payments) The Aggarwal Corporation needs to save $6 million to retire a(n) 56 million mortgage that matures in 18 years. To retire this mortgage, the company plans to put a fixed amount into an account at the end of each year for 18 years. The Aggarwal Corporation expects to earn 8 percent annually on the money in this account. What equal annual contribution must the firm make to this account to accumulate the $6 million by the end of 18 years? The equal annual contribution the firm must make to this account is $ 219164.08 (Round to the nearest cent.)
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Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
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