Question

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"?

Answer 1

Answer : We will have $18,561 at the end.

Calculation & Explanation :

First put calculator into TVM solver mode, then go to apps and choose finance menu and then choose TVM solver.

Then Enter the following data to calculate FV after 6 years :

N = 72 ( i.e 6*12) we have multiplied by 12 as it is monthly compounding.

I = 0.50% (i.e. 6 / 12 ) we have divided by 12 as it is monthly compounding.

PMT = 150 ( i.e. payments made each month)

And then solve for FV ( means move to FV & press Alpha enter)

By solving we get :

FV = $12,961.33

Then we will calculate FV after another 26 years (Future Value of lumpsum). For this we will use the above FV formula again.

Then Enter the following data to calculate FV after 26 years :

N = 312 ( i.e 26*12) we have multiplied by 12 as it is monthly compounding.

I = 0.50% (i.e. 6 / 12 ) we have divided by 12 as it is monthly compounding.

PV = 12,961.33 ( i.e. Present Value now means after initial 6 years)

And then solve for FV ( means move to FV & press Alpha enter)

By solving we get :

FV = $18,561.20