Question

for some reason, i'm getting 101,619.7553 instead of what's in the answer choices, so what am i doing wrong?

Mr. Smith wishes to retire in 16 years. When he retires he would like to have $500,000 in his bank account. Mr. Smith's bank pays 10% per year compounded annually. How much should he deposit now to attain his goal?
a) $108,816.57
b) $108,811.57
c) $108,813.57
d) $108,814.57
e) $108,810.57

Answer 1

How did you get 101,619.7553?

Answer 2

i used the a=P(1+r/n)^nt formula

Answer 3

same as the last question: to find compound intrest:
FutureValue = StartingValue(r/n +)nt
FutureValue = future value of the investment
StartingValue = Starting deposit
r = interest rate
n = times annually interest is compunded
t = years of the investment total value including interest .

Answer 4

what are u adding to in this formula? +)nt

Answer 5

In your case, n=1 (compounded once a year)

Answer 6

n = times annually interest is compunded
t = years of the investment total value including interest .

Answer 7

So it reduces to
A=P(1+r)^t
Perhaps you'd like to recheck the calculations.

Answer 8

n = 1
t = 16

so to find the answer it would be
StartingValue(10/1 +)116

just do that will each amount listed in the answer choices to find the correct answer e.g...
for a you would do 108816.57(10/1 +)116
if that adds to 500,000 or more that is your answer

Answer 9

using that formula, answer a will give you $500,009.20 in 16 years.

Answer 10

thanks, i got the answer now :)

Answer 11

so, would this problem use the same formula as A=P(1+r)^t?

Jack and Tracy would like to have $12,000 for a down payment on a new condo. A savings account at their local credit union will pay 2% per year compounded monthly. How much should they deposit now in this account to have the down payment in 3 years?

Answer 12

d would give you $500,000.01 since that is only a penny off from the question i would go with that one, on your previous question. hang on ill work on the next question

Answer 13

thanks

Answer 14

im sorry, i have 2 screaming kids ive gota get off here and deal with, please read over http://www.mathsisfun.com/money/compound-interest.html it probably can explain it better than me, ill be back on in a few minutes if you can figure it out

Answer 15

reqd amt is 500000/((1+.1)^16)=500000/((1.1)^16) = 108,814.567895
=108,814.57 (appx)

Answer 16

For the downpayment problem, you need to use the general formula:
"i used the a=P(1+r/n)^nt formula"
because there are 12 payments per year, so n=12.
r=2%=0.02
Amount, a is 12000 (in three years)
the time duration, t = 3 years
P is the monthly payment.
You can transpose the equation to get
\( P=\frac{a}{(1+\frac{r}{n})^{nt}} \)
so that you can get your answer directly.
Feel free to post your answer for a check.