Rob Herndon, an accountant with Southwest Airlines, wants to retire 50% of Southwest Airlines bonds by 2038. Calculate the payment Rob needs to make at the end of each year at 6% compounded annually to reach his goal of paying off $300,000 in 20 years.

Annual deposit = $8,155.37

Explanation:

Giving the following information:

Calculate the payment Rob needs to make at the end of each year at 6% compounded annually to reach his goal of paying off $300,000 in 20 years.

To calculate the annual deposit, we need to use the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

Isolating A:

A = (FV*i) / {[ (1+i) ^n]-1}

A = (300,000*0.06) / [ (1.06^20) - 1]

A = $8,155.37