To solve the problem below, you would take the 10.3% annual rate and divide it b
ID: 2757307 • Letter: T
Question
To solve the problem below, you would take the 10.3% annual rate and divide it by 12 (.8583) and then take your number of periods 30 years x 12 (360) to calculate future value. But, do you also divide the payments by 12? I am confused...help
You make $5,400 annual deposits into a retirement account that pays 10.5 percent interest compounded monthly.
How large will your account balance be in 30 years?
How large will your account balance be in 30 years?
Required:How large will your account balance be in 30 years?
Explanation / Answer
Principle(p) = $5400
Rate(r)= 10.5%
Time(t)= 30 years
compounded monthly n= 12
Amount (a) = P(1+r/(100*n))^n*t
A=5400(1+10.5/12)^30*12=124299.95
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