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Problem 5-9 Calculating Annuity Values [LO 1]

 

Assume you deposit $4,600 at the end of each year into an account paying 11 percent interest.

 

How much money will you have in the account in 26 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

 

Annuity future value $ __________

 

How much will you have if you make deposits for 52 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

 

Annuity future value $___________

 Oct 9, 2017
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This is the formula you would use to calculate these:

FV =P x {[1 + R]^N - 1 / R}

FV =$4,600 x {[1+0.11]^26 - 1 / (0.11)}

FV =$4,600 x     1.11^26 - 1 / (0.11)}

FV =$4,600 x        15.07986482123145160920816702304 - 1 /(0.11)}

FV=$4,600 x          127.99877110210410553825606384582

FV=$588,794.35 - The balance in the account after 26 years.

 

Use exactly the same formula, except for the number of years. You should get:

$9,467,733.51 - The balance in the account after 52 years.

 Oct 9, 2017

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