Please help..

Question

Please help..

calculusxy · Answer

Ok

anonymous · Answer

attachment

anonymous · Answer

@elizabethvilleda

anonymous · Answer

@calculusxy

anonymous · Answer

@jim_thompson5910

jim_thompson5910 · Answer

PV = present value
FV = future value

PVOA = present value of ordinary annuity
PVAD = present value of annuity due

jim_thompson5910 · Answer

the basic idea with all of this is that you want to know how much money you need to invest now if you know the interest rate, the length of time, and how much money you want after this given length of time

this amount you invest now is known as the present value and the amount you get later is called the future value

anonymous · Answer

ok

anonymous · Answer

so now what

jim_thompson5910 · Answer

the first formula is calculating how much you need to invest if you just deposit a certain amount of money in the beginning and you leave the account alone for t years (you don't deposit any more money into the account)


the next two formulas involve you depositing money at equal time intervals (usually monthly deposits). The PVOA formula is when you would deposit money at the end of the time period and the PVAD formula is when you deposit money at the beginning of the time period

jim_thompson5910 · Answer

well now it looks like you need to do a few examples

jim_thompson5910 · Answer

so come up with a future value you want (FV), a length of time (t), the compounding frequency (n) and an interest rate r

keep in mind that i = r/n

jim_thompson5910 · Answer

you would then plug those values in and compute to find the present value (PV)

anonymous · Answer

I am so confused, I am doing part 1 now but I dont understand how to do part 2.

jim_thompson5910 · Answer

I just described part 2 above

you plug in various made up values (since you can make up the example) and evaluating

jim_thompson5910 · Answer

keep the values reasonable though

anonymous · Answer

Ok so how many values do I use?

jim_thompson5910 · Answer

you can use as many as you want, but I'm assuming they at least want one example

jim_thompson5910 · Answer

what values did you come up with?

anonymous · Answer

13 , 3 and 5.

jim_thompson5910 · Answer

so you want 13 dollars in future value?

anonymous · Answer

you said come up with random numbers?

jim_thompson5910 · Answer

I know, but I also said make them reasonable

anonymous · Answer

so bigger numbers?

jim_thompson5910 · Answer

here's one example

say you want $5,000 in 10 years and the interest rate is 2.5% (compounded quarterly), what is the amount you need to deposit now (PV)?

this would mean that

FV = 5000
t = 10
r = 0.025
n = 4
i = r/n = 0.025/4 = 0.00625


plug all that into the PV formula