## mariomintchev Group Title I really need help solving this... one year ago one year ago

1. mariomintchev Group Title

2. mariomintchev Group Title

annuity formula: A=R*( (1+i)^n - 1 ) / (i)

3. mariomintchev Group Title

compound formula: A=P(1+ r/n)^nt

4. glamsunnyskylar Group Title

5. mariomintchev Group Title

A company contributes $150 per month into a retirement fund paying a nominal interest rate of 4.40% APR compounded monthly and employees are permitted to invest up to$ 2,900 per year into another retirement fund which pays a nominal interest rate of 4.40% APR compounded annually. How large can the combined retirement fund be worth in 25 years?

6. satellite73 Group Title

we can do this if you have the formulas

7. mariomintchev Group Title

i do but im not getting the results.

8. satellite73 Group Title

i guess this is the formula you wrote A=R*( (1+i)^n - 1 ) / (i) but i am not sure what all the variable represent

9. mariomintchev Group Title

ok A stands for Annuity, R is the payment, i is the APR/frequency of pay, and n is the frequency of pay

10. mariomintchev Group Title

so for example "i" would be .044/12

11. satellite73 Group Title

ok

12. satellite73 Group Title

then $\frac{150(1+\frac{.044}{12})^{12-1}}{\frac{.044}{12}}$ but that can't be right, because there is no time mentioned in the formula is perhaps $$n$$ the number of payments?

13. satellite73 Group Title

that would make more sense it can't really be the frequency of the payments minus one there has to be something mentioning the number of payments made

14. mariomintchev Group Title

n is 12 *25 i think

15. satellite73 Group Title

ooh ok it is the number of payments

16. satellite73 Group Title

$\frac{150(1+\frac{.044}{12})^{12\times 25-1}}{\frac{.044}{12}}$

17. mariomintchev Group Title

why minus 1?

18. satellite73 Group Title

that is what you wrote

19. satellite73 Group Title

you wrote $$n-1$$ i assumed that was in the exponent

20. satellite73 Group Title

makes sense if you are summing a geometric sequence i think

21. mariomintchev Group Title

its not n-1. its raised to n and then you subtract everything in the parenthesis by 1.

22. satellite73 Group Title

oh damn ok

23. mariomintchev Group Title

A = R ( ( 1+i)^(n) - 1 ) / (i)

24. satellite73 Group Title

$\frac{150((1+\frac{.044}{12})^{300}-1)}{\frac{.044}{12}}$

25. satellite73 Group Title

i get 81741.62 rounded http://www.wolframalpha.com/input/?i=\frac{150%28%281%2B\frac{.044}{12}%29^{300}-1%29}{\frac{.044}{12}}

26. mariomintchev Group Title

yeah thats what i got earlier too

27. mariomintchev Group Title

what do we do with the 2900?

28. satellite73 Group Title

redo it

29. satellite73 Group Title

$2900((1.044)^{25}-1)$

30. satellite73 Group Title

since it is yearly, $$i=1$$

31. mariomintchev Group Title

why dont we divide or multiply by 12 anywhere?

32. satellite73 Group Title

not if it is yearly, no that is for monthly

33. mariomintchev Group Title

o i think thats probably what ive been doing wrong

34. satellite73 Group Title

2900 per year compounded annually it says

35. mariomintchev Group Title

THANKS! :)