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chrissytt17
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a person wishes to invest M dollars at t eh end of each month from January 2000 until the end of December 2003. If the account gives interest at the annual rate of 18% compounded monthly and the individual wishes to have $100,000 by the end of 2003, how much should be invested each month?
 2 years ago
 2 years ago
chrissytt17 Group Title
a person wishes to invest M dollars at t eh end of each month from January 2000 until the end of December 2003. If the account gives interest at the annual rate of 18% compounded monthly and the individual wishes to have $100,000 by the end of 2003, how much should be invested each month?
 2 years ago
 2 years ago

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chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
No i don't
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
it is \[A=P\times{(1+r)^{n}}\] where A = Amount P = Principal r = Rate of interest n = number of time period
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
ok now tell me for how many moths you will be investing??
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
so for 3 years that's 36 months
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
you started investing from Jan 200  Dec 2003 right it is 36 months
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
A=100,000x(1+18%)^36
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
a=100,000 (19)^36
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
so here n = 3yrs = 36 months r = 18% per annum but this will get compounded monthly so it cannot be 18%
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
can i leave it in the annual form and just do A=100,000x(19)^3 ?
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
so your formula will change right the formula that i had given u is the general formula now when it is compounded monthly in that case the formula would be \[A = P\times{(1+{{r}\over{12}})^{12n}}\]
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
@chrissytt17 here principal is unknown
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
are you getting my point?
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
i thought the principal is the amount that the individual wants
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
no what you want that you will get at what time????
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
the individual wishes to have $100,000 by the end of 2003, how much should be invested each month?
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
100,000=Px(1+r/12)^12n
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
where r = 18% but when you are plugging in the value of r that time convert it into decimal so r = 0.18
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
100,000= P x (1+.18/12)^12*3 ?
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
100,000= P x (1.015)^36
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
am i on the right track?
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
wait let me cross check it
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
i came up with about 58,513.75
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
no it is not correct
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
I followed the formula
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
I think I am lost
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
hey i was not telling you about the Annuity do you know about it?
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
you are in which class
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
math 118
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
ok do you know about time value of money
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
I'm not sure
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
\[100000 = P \times \sum_{n=1}^{36}(1.015)^n\]\]
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
ok solve this one you will get the exact value
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
the second factor on RHS is called as Present Value Interest Factor of Annuity
 2 years ago

chrissytt17 Group TitleBest ResponseYou've already chosen the best response.0
I don't know what that symbol is
 2 years ago

sheg Group TitleBest ResponseYou've already chosen the best response.0
it is summation
 2 years ago
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