Purchase Solution

# Calculating the future value of an annuity

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A home costs \$350,000. Inflation is expected to be 5% (percent) per year over the next 20 years. How large an equal annual end-of-year deposit must be made into an account paying an interest of 13% in order to buy the house at the end of 20 years ________

\$11,471, \$4,323, \$79,977, or \$17,350

##### Solution Summary

The solution explains how to calculate the future value using inflation and then the annual savings needed to get the future value

##### Solution Preview

We have to first the cost of the house at the end of 20 years. For this we find the future value of \$ 350,000 at the end of 20 years rising ...

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