Question

Stacy Medavoy will invest $8,270 a year for 23 years in a fund that will earn 4% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.) First payment today First payment at year-end

Answer 1

Solution FV = Pmt x < 1 + i) x[[1+iJ^n-1) /; variables used in the formula Fu = Future value Point = Perlodic payment = Discount rate n = Number of periods If payments occures today then FV = 8270 X (1+4%) x (21+4%)^23-1)/4% = 314943 If payments occurs today, then FV = Pmt x ((1+3)^n - 1)li Fv = 8270 x [21+4%)^23-1)/4% = 302830