Question

Finance Help?

Answer 1

Jack starts to save at age 40 for a vacation home that he wants to buy for his 50th birthday. He will contribute $1000 each quarter to an account, which earns 2.1% interest, compounded annually. What is the future value of this investment, rounded to the nearest dollar, when Jack is ready to purchase the vacation home?

Answer 2

uniform series equation, do you have it?

Answer 3

No I used the future value of an ordinary annuity formula 250*(((1+.00525)^(40)-1)/(.00525)) and got 11,095.26

Answer 4

thats the right eq.

where did the value of 250, .00525 and 40 come from in the problem?

Answer 5

1000 compounded quarterly is 250. 2.1% compounded quarterly is .00525 (I think this part is incorrect and should stay 2.1 since the problem says compounded annually but when I use that I get 15,432.20). 40 is the amount of years (10) multiplied by the amount of periods per year (4)

Answer 6

I can see what you are thinking, but I believe we need to get everything in terms of years, since the interest is compounded annually (yearly)

Answer 7

1000 quarterly becomes 4000 yearly
i is still 0.021
n is 10

make sense?

Answer 8

because it dosen't mater if he put the money in every 3 months or just all at once for the year, becuase the interest isn't compounded continuously

Answer 9

Oooohh, I see. So now I have 4000*(((1+.021)^(10)-1)/(.021)) and my answer is 43,999.65 which rounds to $44,000

Answer 10

Thank you :)

Answer 11

^_^

these problems get tricky!

Answer 12

They do but thanks again