We will need $200,000 five years from now to replace our elevator. We want to deposit five equal amounts in a fund starting one year from now so that we will have the money we need in five years. We have arranged to invest the money with Idaho First Bank and Trust at 8% compounded annually. How much should we deposit each year?

    Target Future Value = $ 200000, Rate of Interest = 8 % and Number of Shelters = 5
    Let the equality of each shelter be $ M

    Therefore, M x (1.08)^(4) + M x (108)^(3) + M x (1.08)^(2) + M x (1.08) + M = 200000

    M x [{(1.08)^(5) – 1}/{1.08-1}] = 200000

    M x 5866601 = 200000

    M = 200000 / 5.866601 = $ 34091.29