Janice would like to send her parents on a cruise for their 25th wedding anniversary. She has priced the cruise at $15,000 and she has 5 years to accumulate this money. How much must Janice deposit annually in an account paying 10 percent interest in order to have enough money to send her parents on the cruise

Annual deposit = $2,456.96

Explanation:

Giving the following information:

The number of years = 5 years

Final value = $15,000

Interest rate = 10%

We need to calculate the annual deposit to reach the objective. We will use the following formula:

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

A = annual deposit

Isolating A:

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

A = (15,000*0.1) / [ (1.10^5) - 1]

A = $2,456.96