You have set up an ordinary annuity that will pay you $650.00 a month for the next 25 years. You will earn interest at a rate of 5.5% compounded monthly. What amount did you invest to accomplish this goal?
2006-10-23 07:16:05 · 4 answers · asked by lostinmath 1 in Science & Mathematics ➔ Mathematics
you need the PVA, present value of an annuity:
PVA = A x 1
1- -------------
(1+i)^n
--------------------------
i
About $105000
2006-10-23 07:28:40 · answer #1 · answered by davidosterberg1 6 · 0⤊ 0⤋
you've calculated quantities wisely, type of. The month-to-month compounded fee of $377.32 is definitely staggering. The $386.fifty seven is fallacious. you've in actuality calculated the yearly annuity charge and divided it by technique of 12. it is no longer staggering. you want to amortize the activity collected in the course of the year after reflecting decreases in the month-to-month stability. So, yet in a unique thanks to attempt it is to rework the 7% annual right into a month-to-month activity fee that corresponds to an APR of seven%. it truly is, locate month-to-month fee, "r", so as that (a million + r)^12 = a million.07. r = .005654. Now recompute, and the answer is: $374.sixty 9
2016-12-05 03:37:16 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Get free rates
2015-02-06 18:30:08 · answer #3 · answered by Garrott 1 · 0⤊ 0⤋
Also saw this response the other day. Is that the same question?
http://answers.yahoo.com/question/index;_ylt=AmU0G.ykJyht1k1Y9yXwHdUjzKIX?qid=20061022204439AAwTl82
2006-10-23 15:33:19 · answer #4 · answered by wallstream 2 · 0⤊ 0⤋