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In: Finance

Calculate the accumulated amount of annunity with depositis of $750 monthy at 5% for 20 years....

Calculate the accumulated amount of annunity with depositis of $750 monthy at 5% for 20 years. Discuss how the accumlated amount would change if the monthly deposits was decreased.

Solutions

Expert Solution

Working out both future value of annuities and present value of annuities; The decreasing value is not mentioned so, showed working for decreased value with $50 variation from $750 to $500:

Using financial calculator BA II Plus - Input details:

# = 750

Decreased to 700

Decreased to 650

Decreased to 600

Decreased to 550

Decreased to 500

I/Y = Rate/Frequency =

0.416667

0.416667

0.416667

0.416667

0.416667

0.416667

PMT = Payment or Coupon or Regular payments / Frequency =

-$750.00

-$700.00

-$650.00

-$600.00

-$550.00

-$500.00

N = Total number of periods =

240.00

240.00

240.00

240.00

240.00

240.00

PV = Present Value =

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

CPT > FV = Future Value =

$308,275.25

$287,723.57

$267,171.88

$246,620.20

$226,068.52

$205,516.83

..

.

Using financial calculator BA II Plus - Input details:

# = 750

Decreased to 700

Decreased to 650

Decreased to 600

Decreased to 550

Decreased to 500

I/Y = Rate or yield / frequency of coupon in a year =

                0.416667

                0.416667

                0.416667

                0.416667

                0.416667

                0.416667

PMT = Coupon rate x FV / frequency =

-$750.00

-$700.00

-$650.00

-$600.00

-$550.00

-$500.00

N = Number of years remaining x frequency =

240.00

240.00

240.00

240.00

240.00

240.00

FV = Future Value =

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

CPT > PV = Present value =

$113,643.98

$106,067.72

$98,491.45

$90,915.19

$83,338.92

$75,762.66

jeff jeffy answered 3 years ago
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