At the end of each month, for 24 months, $200 is put into an
account paying 7% annual interest compounded continuously. Find the
future value of this account. Round your answer to the nearest
cent.
How much money must be invested now at 10% interest compounded
continuously so that $120,000 will be available in 5 years? Round
to the nearest cent.
Find the amount of money that accumulates when $470,000 is placed annually into a non-interest-earning account for 3 years.
Future value of 200 payment for 24 months is:
| Future value | = | CF * (e^rt -1)/(e^r -1) |
| Cash flow | CF= | 200 |
| Monthly rate | r= | 0.005833333 |
| Number of payments | t= | 24 |
| Future value | = | 5,137.23 |
Amount to be invested today to received 120,000 is 72,783.68
| Present value= | FV / e^(r*N) | |
| Future value | FV= | 120000 |
| Rate of interest | r= | 10% |
| Number of years | N= | 5 |
| Present value= | 120000/ e^(0.1*5) | |
| Present value= | 72,783.68 | |
| where e= | 2.718281828 |
When no interest earned, amount that accumulated in three years = 470,000 * 3 = 1,410,000
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