Question

In: Finance

Suppose you saved $483 at the end of each month for 37 years and your savings...

Suppose you saved $483 at the end of each month for 37 years and your savings earned an interest rate of 3.5%. If instead you had saved for only 11 years, how much would you have had to save each month in order to reach the same final balance? Round to the nearest cent.

Expert Solution

Answer:

Part 1

PMT (per month deposit) = $483

no of year = 37 years

n = 37 x 12 = 444

Rate = 3.5% per year

rate per month = 3.5% / 12 = .29167%

Future value = PMT[(1+R)^n -1/R]

= 483 [ (1.0029167)^444 - 1/.29167%]

= 483[(3.644120775) -1 / .29167%]

= 483[ 2.644120775/ .29167%]

= 483 X 906.5556944

= $437,866.40

Part B

Future value = = $437,866.40

period = 11 years

n = 11 x 12 = 132

Rate = 3.5% per year

rate per month = 3.5% / 12 = .29167%

Monthly deposit = Future value /[(1+R)^n -1/R]

= 437,866.40 / [ (1+ .29167%)^132 - 1/.29167%]

= 437,866.40 / [ (1.0029167%)^132 - 1/.29167%]

= 437,866.40 / [1.468791026 - 1/.29167%]

= 437,866.40 / [.468791026/.29167%]

= 437,866.40 / 160.7283517

= $2724.26 per month

jeff jeffy answered 2 years ago

You put $50 in your savings account at the end of each month.

You put $50 in your savings account at the end of each month. The nominal interest rate is 14% annual nominal compounded monthly, and you have at the end $2,221.14. what its your annuity value?

Suppose you invest $150 at the end of each month for 6 years into an account...

Suppose you invest $150 at the end of each month for 6 years into an account earning 6% annual interest compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 26 years. How much will you have in the end? How would I solve this using the "TI-84 plus Tvm solver"?

`1- Liz saved $270 at the end of every month for 6 years in her bank...

`1- Liz saved $270 at the end of every month for 6 years in her bank account that earned 3.70% compounded monthly. a. What is the accumulated value of her savings at the end of the period? a$21,393.49 b$21,729.45 c$196,528.63 d$2,289.45 b. What is the interest earned over the period? a$2,019.45 b$21,729.45 c$2,559.45 d$2,289.45 2- What nominal interest rate compounded semi-annually is equivalent to 3.63% compounded quarterly? % 3-If Lionel wants to earn interest of $3,547.75 on his $11,000.00 savings...

If you invest $200 at the end of each month for five years and you earn...

If you invest $200 at the end of each month for five years and you earn 9% interest compounded monthly, how much will you have accumulated at the end of the fifth year?

You will deposit $80 at the end of each month for 15 years into an account...

You will deposit $80 at the end of each month for 15 years into an account with annual interest rate 3% compounded monthly, and then withdraw equal amounts at the end of each month for the following 25 years, ending with a zero balance. What will your monthly withdrawals be?

How much must be saved at the end of each year for the next 10 years...

How much must be saved at the end of each year for the next 10 years in order to accumulate $50,000, if you can earn 9% annually? Assume you contribute the same amount to your savings every year. $3,291.00 A $3,587.87 B $4,500.33 C $4,587.79 D

The company you work for will deposit $400 at the end of each month into your...

The company you work for will deposit $400 at the end of each month into your retirement find. Interest is compounded monthly. You plan to retire in 15 years from now and estimate that you will need $2,000 per month out of the account for the next 10 years following your retirement. If the account pays 7.25% compounded monthly, how much do you need to put into the account in addition to your company deposit in order to meet your...

A.At the end of 7 years, your friend wants to have $10,234 saved for a down...

A.At the end of 7 years, your friend wants to have $10,234 saved for a down payment on a house. He expects to earn 9%—compounded annualy—on his investments over the next 7 years. How much would your friend have to put in his investment account each month to reach his goal? B.A builder is offering $100,000 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to...

At the end of each month, you would enter your actual spending in each category to...

At the end of each month, you would enter your actual spending in each category to identify budget variances. What is your experience with creating and using a personal budget? Have you tracked expenses to identify variances? If so, what method did you use? What new strategies are there? How can your tax withholding affect your budget or financial goals?

Suppose that you deposit $871 in a savings account at ProsperityBank at the end of...

Suppose that you deposit $871 in a savings account at Prosperity Bank at the end of each of the next 7 months. You plan to leave these contributions and any interest earned in the account until 7 months are up. The interest rate is 2.47% per month. What is the future value of your account at the end of the holding period? Do not round at intermediate steps in your calculation. Round your final answer to the nearest penny. Do...