Sara has just graduated from college. She has determined that to purchase a home in 13 years she needs to accumulate $23,900 for a down payment. If Sara can earn 6% per year on her savings, what is the amount of the annual annuity payment that Sara must make at the end of each year for 13 years?

The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75

Explanation:

future value = $23900

FVA (6%,13) = ((1.06^13) - 1) / 0.06)

= 18.88214

amount of annuity payment = future value/FVA

= 23900/18.88214

= $1265.7464

Therefore, The amount of the annual payment that Sara must make at the end of each year for 13 years is 1265.75