Final Exam Study Guide Problem 10 Solution

In this problem, you compute the payment on an ordinary annuity using


Problem 10 The Central Yavapai Fire District wants to take advantage of a state program to save money to purchase a new fire truck. The truck will cost $400,000. To save for the truck, the district will make a monthly deposit into an ordinary annuity paying 10.8% annual interest. If they wish to have the money for the purchase in 60 months, how much should each payment into the annuity be?

Solve final_study_guide_soln_10afor PMT with FV = 400000, n = 60, and  i = .108/12:


This gives a payment of 5057.13.