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Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interest of 6% compounded monthly.

Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interest of 6% compounded monthly.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interest
of 6% compounded monthly.
which of the answers in the picture is wright and why
Accumulated balance = P*[(1+R)N-1]/R = 30* [(1+0.0050)60.-1]/0.0050 = 30* [(1.005060-1]/0.0050 = 30*[1.3488501525493-1]/0.0050 = 30*0.3488501525493/0.0050 = 30*69.77003050986 = 2093.10 Hence Accumulated balance =$ 2093.10
Transcribed Image Text:Accumulated balance = P*[(1+R)N-1]/R = 30* [(1+0.0050)60.-1]/0.0050 = 30* [(1.005060-1]/0.0050 = 30*[1.3488501525493-1]/0.0050 = 30*0.3488501525493/0.0050 = 30*69.77003050986 = 2093.10 Hence Accumulated balance =$ 2093.10
Calculate the accumulated value as follows: Monthly payment = 30 No of months= 60Rate = 6% Monthly rate = 6%/2 = 0.5% (1+ rate)ime )x(1+ rate) 4)x(1+ 0.5%) ')×( 1.00) Future value of annuity due = annuity × rate (1+0.5%y" = 30 x 0.5% (1.005) -1 = 30 x :) × ( 1.005 0.005 * ( 1.005) 1.3488-1 = 30 x ( 0.005 0.3488 = 30 x ) × ( 1.005 0.005 = $2, 103. 57
Transcribed Image Text:Calculate the accumulated value as follows: Monthly payment = 30 No of months= 60Rate = 6% Monthly rate = 6%/2 = 0.5% (1+ rate)ime )x(1+ rate) 4)x(1+ 0.5%) ')×( 1.00) Future value of annuity due = annuity × rate (1+0.5%y" = 30 x 0.5% (1.005) -1 = 30 x :) × ( 1.005 0.005 * ( 1.005) 1.3488-1 = 30 x ( 0.005 0.3488 = 30 x ) × ( 1.005 0.005 = $2, 103. 57
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