Question

Money is continuously deposited into an account at a rate of $M per year.

Answer #1

Facts of the
question:

Regular annual deposit of one million dollar.

Question doesnt mention the requirement, hence assuming that Future
Value is required for annual deposits (Annuity) of one million
dollar at a specific rate of interest.

I assume that interest rate is 3% per annum.

and period of investment assumed as 5 years

Formula for Future value of fixed annuity:

F = P * ([1 + I]^N - 1 )/I

P= Annual Deposits amount, in above case, its one million dollar

I=Interest rate, we assumed 3%

N= Number of payment, we assumed 5 years

Hence,

Future value (FV) = $1Mn*([1+3%]^5-1)/3%

FV= $1Mn*(1.03^5-1)/(3/100)

1.03^5 evaluates to 1.15927

1.03^5-1 evaluates to 0.159274

Multiply $1Mn and 0.159274

$1Mn*(1.03^5-1) evaluates to $0.159274Mn

3/100 evaluates to

$1Mn*(1.03^5-1)/(3/100) evaluates to $5.30914Mn

For any further question on this, please post with your additional questions.

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