Question

In: Advanced Math

At the end of each of the next 8 years, you plan to put $25,000 in...

At the end of each of the next 8 years, you plan to put $25,000 in the bank. If the annual interest rate is 3%, what is the present value of this planned savings stream? What will the bank balance be at the end of the 8 year period? [Hint: once you know the present value of the savings stream, it's easy to work out the future value]

Expert Solution

we are solve this problem by 2 method

first solve this problem by given hint

.

PMT = 25000

PV = ?

r=3% = 0.03

t = 8 years

..............present value

..

.

now find its future value

................future value

.

solve directly it's future value

PMT = 25000

PV = ?

r=3% = 0.03

t = 8 years

................future value

as we can see both answers are same!

Colby Messinger answered 2 years ago

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