In order to have a future value of $50,000 in 10 years, determine how much money you would be required to pay annually if your interest rate is 5 percent per year.(1 point) Responses $3,975 per year $3,975 per year $4,907 per year $4,907 per year $4,889 per year $4,889 per year $441 per year
$3,975 per year
In order to determine the annual payment needed to reach a future value of $50,000 in 10 years at an interest rate of 5 percent per year, you can use the formula for calculating the future value of an annuity:
FV = P * ((1 + r)^n - 1) / r
Where:
FV = Future value ($50,000)
P = Annual payment
r = Interest rate (5% or 0.05)
n = Number of years (10)
$50,000 = P * ((1 + 0.05)^10 - 1) / 0.05
$50,000 = P * (1.6289)
P = $50,000 / 1.6289
P ≈ $3,975
Therefore, you would be required to pay approximately $3,975 per year to reach a future value of $50,000 in 10 years at an interest rate of 5 percent per year.