to get out interest rate in annuity case with monthly compounding?

Question

depositing $1000 every month in a bank and i want i million after 7 year compunded month,interest rate needed?

Answer 1

FV = A[ ((1+r)^N - 1)/r]

1,000,000 = 1000[((1+(rs/12))^(7*12) - 1)/r]

Something like that. It's algebra after that. This assumes an ordinary annuity. This assumes you want the annual stated interest rate (rs).

Answer 2

well, u can calculate the annual effective yeild, which is the actual interest rate compounded monthly,,,using that equation EAY={1+ (r/m)m*n}, where r is the interest per year, m is the frequency of compounding ( if monthly then m=12) and n is the number of years, then if u r computing a future value then multiply the amount by the above equation

Answer 3

To come up with this answer, your need to find the IRR of the cash flow stream of depositing 1000/month over 7 years and having 1 million at the end of the time. This answer is 4.72% per month or nearly 57% per annum.