A manufacturer of industrial grade gas handling equipment wants to have $500,000 in an equipment replacement contingency fund 10 years from now. If the company plans to deposit a uniform amount of money each year beginning now and continuing through year 10 (total of 11 deposits), what must be the size of each deposit? Assume the account grows at a rate of 10% per year.
What will be an ideal response?
A = 500,000(A/F,10%,11)
= 500,000(0.05396)
= $26,980
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