In order to have a future value of $65000 in 15 years, determine how much money you would be required to pay annually if your interest rate is 4 percent per year.
To determine the annual payment required to reach a future value of $65,000 in 15 years at an interest rate of 4% per year, you can use the formula for the future value of an annuity:
FV = Pmt * ((1 + r)^n - 1) / r
Where:
FV = future value ($65,000)
Pmt = annual payment
r = interest rate (4% or 0.04)
n = number of years (15)
Plugging in the values, we get:
$65,000 = Pmt * ((1 + 0.04)^15 - 1) / 0.04
$65,000 = Pmt * (1.04^15 - 1) / 0.04
$65,000 = Pmt * (2.938 - 1) / 0.04
$65,000 = Pmt * 1.938 / 0.04
$65,000 = Pmt * 48.45
Now, solving for Pmt:
Pmt = $65,000 / 48.45
Pmt = $1,341.77
Therefore, you would need to pay approximately $1,341.77 annually in order to have a future value of $65,000 in 15 years at an interest rate of 4% per year.