For each of the following annuities, calculate the future value (Enter rounded a

Question

For each of the following annuities, calculate the future value (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16) Future Value Annual Payment Interest Rate Years 1,610 6% 10 200 39 3,850 8,570 33 Screen Shot 2015-02-22 at 4.17.47 PM a Search You want to be a millionaire when you retire in 40 years How much do you have to save each month if you can earn an 11.9 percent annual return? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16) Savings per month How much do you have to save each month if you wait 15 years before you begin your deposits? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16) Savings per month How much do you have to save each month if you wait 25 years before you begin your deposits? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16) Savings per month

Explanation / Answer

Details of investment Interest Factor Formulae for FV FV FV of Annuity(A=1610   , N= 10 , I=6    ) Interest Factor=(1.06^10)=1.79 =1610*(1.79-1)/0.06 21198.33 FV of Annuity(A=7200   , N=39   , I=7    )= Interest Factor=(1.07^39)=13.99 =7200/(13.99-1)/0.07 7918.18 FV of Annuity(A=3850   , N=9   , I= 4   )= Interest Factor=(1.04^09)=1.42 =3850/(1.42-1)/0.04 229166.67 FV of Annuity(A=8570   , N=33   , I= 8   )= Interest Factor=(1.08^33)=12.67 =8570/(12.67-1)/0.08 9179.52 FV=A*(F-1)/I , where F=Interest Factor , I=interest In case of 40 year desposit Interest per month=(11.9/12) 0.99 FV of annuity=1000000 Interest Fator=(1.0099)^(40*12) 113.14 FV=A*(F-1)/I or A=FV*i/(F-1)=(1000000*0.0099)/(113.14-1) 88.28 In case of 25 year deposit Interest per month=(11.9/12) 0.99 FV of annuity=1000000 Interest Fator=(1.0099)^(25*12) 19.21 FV=A*(F-1)/I or A=FV*i/(F-1)=(1000000*0.0099)/(19.21-1) 543.66 In case of 15 year deposit Interest per month=(11.9/12) 0.99 FV of annuity=1000000 Interest Fator=(1.0099)^(15*12) 5.89 FV=A*(F-1)/I or A=FV*i/(F-1)=(1000000*0.0099)/(5.89-1) 2024.54

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