Circle all final answers. Show all work. Don’t forget units. Round all answers t

Question

Circle all final answers. Show all work. Don’t forget units. Round all answers to the nearest dollar and always round up (i.e. $123.45 is $124 and $12.34 is $13). Only round your final answer. Read the Homework Guidelines document in CatCourses for more information. You MUST staple your homework before you hand it in.

Problem 2.37 (10 pts). A no-load (commission-free) mutual fund has grown at a rate of 11% compounded annually since its beginning. If it is anticipated that it will continue to grow at that rate, how much must be invested every year so that $15,000 will be accumulated at the end of five years?

Explanation / Answer

Future value = Annuity * [ ( 1 + r)n - 1] / r

15,000 = Annuity * [( 1 + 0.11)5 - 1] / 0.11

15,000 = Annuity * 6.227801

Annuity = $2,409

Amount to be invested every year is $2,409

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