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Periodic Deposit 5,000 at the end of teh each year, Rate: 4%, Time: 30 yearsa. After 30...

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soman2006 | Student, Undergraduate | (Level 2) Salutatorian

Posted June 9, 2012 at 7:32 PM via web

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Periodic Deposit 5,000 at the end of teh each year, Rate: 4%, Time: 30 years

a. After 30 yearsyou will have aproximately$____?

b. The interest is approximately$___?

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thilina-g | College Teacher | (Level 1) Educator

Posted June 9, 2012 at 7:42 PM (Answer #1)

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The future value, F is given by,

`F= P(((1+i)^n -1)/i)`

P is the periodic installment, i is the interest rate for the period and n is the number of periods.

`F= 5000(((1+0.04)^30 -1)/0.04)`

`F= 5000((1.04^30 -1)/0.04)`

`F = 5000 xx 56.0849`

`F = 280424.5`

 

After 30 years, you would have 280424.5

 

The total investment `= 30 xx 5000 = 150000`

Therefore the interest is `= 280424.50 - 150000 = 130424.50`

 

Therefore the interest is 130424.50.

 

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