I really need help solving this...

- anonymous

I really need help solving this...

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- anonymous

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- anonymous

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

- anonymous

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

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- anonymous

Sorry, it won't load for me, or else I really would help you.

- anonymous

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?

- anonymous

we can do this if you have the formulas

- anonymous

i do but im not getting the results.

- anonymous

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

- anonymous

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

- anonymous

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

- anonymous

ok

- anonymous

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?

- anonymous

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

- anonymous

n is 12 *25 i think

- anonymous

ooh ok it is the number of payments

- anonymous

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

- anonymous

why minus 1?

- anonymous

that is what you wrote

- anonymous

you wrote \(n-1\) i assumed that was in the exponent

- anonymous

makes sense if you are summing a geometric sequence i think

- anonymous

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

- anonymous

oh damn ok

- anonymous

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

- anonymous

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

- anonymous

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}}

- anonymous

yeah thats what i got earlier too

- anonymous

what do we do with the 2900?

- anonymous

redo it

- anonymous

\[2900((1.044)^{25}-1)\]

- anonymous

since it is yearly, \(i=1\)

- anonymous

why dont we divide or multiply by 12 anywhere?

- anonymous

not if it is yearly, no
that is for monthly

- anonymous

o i think thats probably what ive been doing wrong

- anonymous

2900 per year compounded annually it says

- anonymous

THANKS! :)

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