First payment to cover the entire cost of the licensing fees

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Reference no: EM13889026

Scarecrow Manufacturing will need to begin paying a licensing fee of $5697 at the end of year 6. Scarecrow will have to pay the licensing fee for 8 years, but the fee will decrease each year by $123. Scarecrow wants to spread out this cost so it would like to make equal deposits in each year before the first payment. (In other words, by the time of the first payment, Scarecrow will have all of the money saved.) The bank account pays 6% interest compounded annually. How much does Scarecrow need to deposit each year before the first payment to cover the entire cost of the licensing fees?

Reference no: EM13889026

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