"How much must they deposit NOW"
isn't that present ?
PV = 5500( 1 - 1.02^-20)/.02
= $89932.88
Young and Company owes bond holders $5,500 interest at the end of each quarter for the next five years. How much must they deposit now at 8% interest compounded quarterly to yield an annuity payment of $5,500?
-- I am pretty sure I know how to do the problem but I am just wondering if it is a future value problem, a present value problem, sinking funds problem or an ammorization problem..?
3 answers
Yes, that was right. I must have put in the wrong numbers at first when I was doing it so I thought I was using the wrong formula.
Thank you by the way! I appreciate it.