# Solution: What is the amount he would need to deposit now?

An instructor plans to retire in exactly one year and want an account that will pay him P25,000 a year for the next 15 years. Assuming a 6% annual effective interest rate,

#### Problem Statement: ME Board April 1998

An instructor plans to retire in exactly one year and want an account that will pay him P25,000 a year for the next 15 years. Assuming a 6% annual effective interest rate, what is the amount he would need to deposit now? (The fund will be depleted after 15 years).

• A. P242,860.22
• B. P242,680.22
• C. P242,608.22
• D. P242,806.22

The amount he would need to deposit now is P242,806.22.

Solution:

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 We educate thousands of students a week in preparation for their licensure examinations. We provide professionals with materials for their lectures and practice exams. To help us go forward with the same spirit, contribution from your side will highly appreciated. Thank you in advance. Option 1 : \$5 USD Option 2 : \$10 USD Option 3 : \$15 USD Option 4 : \$20 USD Option 5 : \$25 USD Option 6 : \$50 USD Option 7 : \$100 USD Option 8 : Other Amount