Question

What’s the future value of the initial $100 deposit after 10 years? We assume current interest rate is = 6%, compounded monthly.

a. $121.0

b. $161.6

c. $181.9

d. $223.4

You want to receive $5,800 per month in retirement. If you can earn 0.8% return per month and you expect to need the income for 30 years, how much do you need to have in your account at retirement?

		$585,123
		$599,513
		$626,783
		$683,833

Answer 1

FV= PV*(1+r)^n

Where,

FV= Future Value

PV = Present Value

r = Interest rate =6%/12 =0.5%

n= periods in number =10*12 =120

= $100*( 1+0.005)^120

=100*1.8194

= $181.94 Correct Option =c. $181.9

2)

Present Value Of An Annuity

= C*[1-(1+i)^-n]/i]

Where,

C= Cash Flow per period

i = interest rate per period =0.8%

n=number of period =30*12 =360

= $5800[ 1-(1+0.008)^-360 /0.008]

= $5800[ 1-(1.008)^-360 /0.008]

= $5800[ (0.9432) ] /0.008

= $6,83,833.26