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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?
 one year ago
 one year ago
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?
 one year ago
 one year ago

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shegBest 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
 one year ago

shegBest ResponseYou've already chosen the best response.0
ok now tell me for how many moths you will be investing??
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
so for 3 years that's 36 months
 one year ago

shegBest ResponseYou've already chosen the best response.0
you started investing from Jan 200  Dec 2003 right it is 36 months
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
A=100,000x(1+18%)^36
 one year ago

shegBest 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%
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
can i leave it in the annual form and just do A=100,000x(19)^3 ?
 one year ago

shegBest 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 \[A = P\times{(1+{{r}\over{12}})^{12n}}\]
 one year ago

shegBest ResponseYou've already chosen the best response.0
@chrissytt17 here principal is unknown
 one year ago

shegBest ResponseYou've already chosen the best response.0
are you getting my point?
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
i thought the principal is the amount that the individual wants
 one year ago

shegBest ResponseYou've already chosen the best response.0
no what you want that you will get at what time????
 one year ago

shegBest 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?
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
100,000=Px(1+r/12)^12n
 one year ago

shegBest 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
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
100,000= P x (1+.18/12)^12*3 ?
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
100,000= P x (1.015)^36
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
am i on the right track?
 one year ago

shegBest ResponseYou've already chosen the best response.0
wait let me cross check it
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
i came up with about 58,513.75
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
I followed the formula
 one year ago

shegBest ResponseYou've already chosen the best response.0
hey i was not telling you about the Annuity do you know about it?
 one year ago

shegBest ResponseYou've already chosen the best response.0
ok do you know about time value of money
 one year ago

shegBest ResponseYou've already chosen the best response.0
\[100000 = P \times \sum_{n=1}^{36}(1.015)^n\]\]
 one year ago

shegBest ResponseYou've already chosen the best response.0
ok solve this one you will get the exact value
 one year ago

shegBest ResponseYou've already chosen the best response.0
the second factor on RHS is called as Present Value Interest Factor of Annuity
 one year ago

chrissytt17Best ResponseYou've already chosen the best response.0
I don't know what that symbol is
 one year ago
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