QUESTION 1
Use the future value formula to find the indicated value. FV=10,000; i=0.03; PMT=$800; n=? n= (round up to the nearest integer as needed)
QUESTION 2
Acme Annuities recently offered an annuity that pays 7.5 % compounded monthly. What equal monthly deposit should be made into this annuity in order to have $81,000 in 19 years?
The amount of each deposit should be $ (Round to the nearest cent.)
QUESTION 3
A company estimates that it will need $87,000 in 8 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each payment be?
The amount of each payment should be $
(Round to the nearest cent.)
Answer 1 The formula of the future value of annuity ordinary is Fv=pmt [(1+r)^(n)-1)÷r] Solve the formula for n Fv/pmt=(1+r)^(n)-1)÷r cross multiplication (Fv/pmt)×r=(1+r)^(n)-1 (Fv/pmt)×r+1=(1+r)^(n) take the log for both sides Log ((Fv/pmt)×r+1)=n×log (1+r) Divide each side by log (1+r) N=[Log ((Fv/pmt)×r+1)]÷log (1+r) Now solve to find n N=log((10,000÷800)×0.03+1) ÷log(1+0.03)=10.77years round your answer to get 11 years
