formula for calculataing maturity value after period of ten years with rate of interest 8% compounded annually

Question

formula for calculataing maturity value after period of ten years with rate of interest 8% compounded annually with monthly contribution of Rs 550 .

Answer 1

This is a poorly stated question -- which is why the other answers are either wrong or incomplete.

There are really two parts to this question.

Part 1: What is the formula for the Future Value (at year ten) of a sum, compounded annually at 8%

Let FV = Future Value
Let PV = Present Value
Let R = One period rate
Let N = Number of Periods

Then FV = PV * (1+R)^N = PV*(1.08)^10

If you knew wha tthe present value is, you could find the future value.

Part 2:

What is the future value if you put away 550 every month.

To find this, we first have to find the present value of an annuity. Then we use the formula above to find the future value of that present value.

The value of an annuity is:

PV = A/i - A/[i*(1+i)^K]

Here:

A is the monthly value (550)
K is the number of months (K = 10*12 = 120)
i is the monthly rate.

To find 'i' you need to be careful. If 8% were the nominal rate -- (meaning annualized by compounded monthly) then you would divide 8% by 12 to get the monthly rate.

But since 8% is coumpounded yearly, it means it is an APR. To ge the monthly rate, you need the following formula:

i = (1.08)^(1/12) - 1

Use these formulas to get the PV, then multiply that by (1.08)^10 to get the FV.

Good luck

Answer 2

There is a very simple formula to know in how many years your money will be double. Divide 72 by the rate of interest and the resultant figure is the no. of years to double the money at that particular rate of interest.
For example @12% pa, the amount will double in 6 (72/12) years. or @5% it will be in 14.4 (72/5) years.
this is for lump sum one time investment and not for monthly contribution.

Answer 3

Maturity value=550(FVIFA)8/12,120+(Princicpal amount.
FVIFA is future value interest factor of an annuity for 8/12 % for 120 periods. FVIFA can be easily got from a 'compound interest table'
Actually this is not a generaly used criteria for bonds.
The generally used criterion are yield to maturity, holding period yield, current yield, capital gains yield etc;.

Answer 4

This is a concept of duration that is especially relevant for analysts who counsel the managers of defined-benefit pension funds. Many such funds have obligations to pay future pensions that are fixed in nominal (e.g. dollar) terms, at least formally. Moreover, the bulk of the cash flows must be paid at dates far into the future. The present value of the liabilities of such a plan can be computed in the usual way and its yield-to-maturity (internal rate of return) or discount rate, determined, using market rates of interest. In many cases, the discount rate will be very close to a long-term rate of interest (e.g. that for 20-year bonds). Since term structures of interest rates tend to be quite flat at the long end, any change in the long-term rate of interest will be accompanied by a roughly equal change in the discount rate for a typical pension plan of this type. Thus the duration of the plan's cash flows provides a good estimate of the sensitivity of the present value of its liabilities to a change in long-term interest rates. Any imbalance between the duration of the assets in a pension fund held to meet those liabilities and the duration of the liabilities may well provide an indication of the extent to which the fund is taking on interest rate risk.

Hope this helps.

HANK (Josh)

Answer 5

P*R*T..principle .rate.time.
for instance
500*8%=40 dollars 1 year.
540*8%= 43.20 at end of 2 years
583.20 * 8% = 46.66 at end of 3 years
676.51 * 8% = 54.12 at end of 4 years
compounded annualy you keep adding the interest from each year onto previous years amount and go from there.
A simple interest formula is P*R*T
for the 5th year you add 676.51+ 54.12 and then multiply that number by 8% for the amount after 5 years.

Answer 6

The algebraic formula is complicated. In your case, the simplest method is to multiply your monthly contribution by 181.28

Answer 7

1year=12months(10years=120months)
per month contribution=Rs.550
for 10 years(120months*Rs550=Rs.66000)
Time=10 years
Principle=66000Rs
Rate of intrest=8%
Intrest=P*T*R/100
=66000*10*8/100
=52800.Rs

Answer 8

A=P(1+R/100)^N
WHERE
P=PRINCIPAL
R=RATE OF INTEREST
N= NO OF DAYS.

Answer 9

P=50000(1.08)^20 ,(use caculator to find (1.08)^20 multiply result by 50000(i haven,t)