Question

You want to have $10,000 in 4 years. You currently have 4,000 saved up in a bank account to help you reach your goal. In addition to the $4,000, you plan to make payments every 6 months at 86 until you reach your goal. Assume all money is compounded at the same frequency as your payments. What is the amount of these payments? Draw Timeline. Identify the TVM problem types and show your work. T TT Anial T E 3 (12pt) Path: p Words:0

thats the type of format i need in the second photo no formulas or anything

please hurry

Answer 1

Problem type: FVA PMT and FV PV.

If x is the six-monthly amount saved then

10,000 = 4,000*FV(8%/2, 4*2) + x*FVA*(8%/2, 4*2)

FV(8%/2,4*2) = 1.3686; FVA(8%/2, 8) = 9.2142

10,000 = (4,000*1.3686) + x*9.2142

x = (10,000 - 5,474.28)/9.2142 = 491.17 (six monthly payment to be made)

Timeline:

Time	0	1	2	3	4	5	6	7	8
Deposits	(4,000)	(491.17)	(491.17)	(491.17)	(491.17)	(491.17)	(491.17)	(491.17)	(491.17)
FV									10,000