Unformatted text preview: 6. Draw the time line and solve for the amount of money you would have to put into a bank account each and every year (starting one year from today) if it earns 18% interest each and every year and you want to accumulate $71,542 at year 5. 7. Draw the time line and solve for the amount of money you would have in your bank account if you put $100 each and every year (starting today) for thee years. You would be making a total of four $100 payments. The interest rate is 5% for each year. To find time “n” of annuity > FV= PVxPVIFA%,N Interest Rate of Annuity> AO=PMTxPVIFA%,N Lump of Sum> Pn=Po(1+r)^n Discounting Lump Sum>Po=Pn[1/(1+r)^n]...
View Full Document
- Winter '08
- Interest Rate, time line, $71,542, $90,420