In: Finance
If you make a deposit of the amount below at the end of each year for the number of years at the interest rate specified, how much money will you have in the account at the end of that time?(Do not round intermediate calculations, round answer to two decimal places, i.e. 32.16)
Payment:9000
Years:23 Interest
Rate:9.2%
Amount in the account at the end of 23 years = $ 642,759.69
Calculation of Future Value of Investment:
MULTIPLE EQUAL CASH FLOW (ORDINARY ANNUITY*)
*Ordinary Annuity is when the cash Flows arises at the End of each year.
[Where,
FV = Future Value of Investment
CF = Cash Flows = $ 9000
R = Rate of Interest= 9.2%
n = Number of periods = 23 years ]
(using calculator)
FV = $ 642,759.69
Alternatively, in excel
Particulars | in formulae | Values |
CASH FLOWS | PMT | -9000 |
RATE | RATE | 9.20% |
TIME (YEARS) | NPER | 23 |
FV (Future Value) | = | $642,759.69 |
Formula used | "=FV(RATE,NPER,PMT,0,0) | |
=FV(0.092,23,-9000,0,0) | ||
*PMT used in formulae should be negative as it is an outflow | ||
**PV ( Present Value is taken 'zero' as there is no opening amount ) | ||
***TYPE is taken '0' as amount is deposited at the end of each period. |