Question

Calculate the amount available after 20 years assuming that the investor reinvests all distributions. All funds considered generate a 10% annual return throughout the period and the amount invested annually is always $3000. The fund charges a 5% load fee so that only $2850 is actually invested in the fund every year. (Assume that distributions are not subject to the load fee) .

Answer 1

FV of annuity
P = PMT x ((((1 + r) ^ n) - 1) / i)
Where:
P = the future value of an annuity stream	A
PMT = the dollar amount of each annuity payment	2850
r = the effective interest rate (also known as the discount rate)	10.00%
i=nominal Interest rate	10.00%
n = the number of periods in which payments will be made	20
Future value of annuity=	PMT x ((((1 + r) ^ n) - 1) / i)
Future value of annuity=	2850* ((((1 +10%) ^20) - 1) / 10%)
Future value of annuity=	$      163,233.75