If you deposit money today in an account that pays 6.5% annual interest, how lon

Question

If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money? You have $42,180,53 in a broke average account, and you plan to deposit an additional $5,000 at the end of every future you until your account totals $250,000. You expect to earn 125% annually on the account. How many years will it take to reach your goal? What is the future value of a 7%, 5-years ordinary annuity that pays $300 each year? If this were an annual due, what it future value be?

Explanation / Answer

1) FV = PV*(1+r)^n

2 = (1+0.065)^n

n=11 years

2)

FV = principal amount*(1+i)^n +

K = n

      [(annual payment)/(1 +i/100)^k]

k=1

250000

= 42180.53*(1+.12)^n +

K = n   

      [(5000)/(1 +12/100)^k]

k=1

N = 53 years

3) a

FV of annuiyy = C* ( ((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV = 300 *[((1+ 7/100)^5 -1)/(7/100)] = 1725.22

FV of annuity due = c*(((1+ i)^n - 1)/i)*(1 + i )

C = Cash flow per period

i = interest rate

n = number of payments

FV = 300 *[((1+ 7/100)^5 -1)/(7/100)]* (1 +7/100) = 1845.987

Please ask remaining questions seperately

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