Question

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

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

Homework Answers

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.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Adam deposited $1500 in an account in which interest is compounded continuously. The annual rate of...
Adam deposited $1500 in an account in which interest is compounded continuously. The annual rate of interest is 2.5 %. How long does it take for his money to double?
How much money will be in an account into which $500 per month is deposited for...
How much money will be in an account into which $500 per month is deposited for 8 years, if the interest rate is 6% compounded monthly?
$2000 is deposited with an annual interest of 2% compounded continuously. (a) Find the balance of...
$2000 is deposited with an annual interest of 2% compounded continuously. (a) Find the balance of the account in 5 years (b) How long will it take for the money to become 3 times at this rate?
When interest is compounded continuously, the amount of money increases at a rate proportional to the...
When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t, that is, dS/dt = rS, where r is the annual rate of interest. (a) Find the amount of money accrued at the end of 8 years when $5000 is deposited in a savings account drawing 5 3 4 % annual interest compounded continuously. (Round your answer to the nearest cent.) $ (b) In how many years will the...
When interest is compounded continuously, the amount of money increases at a rate proportional to the...
When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t, that is, dS/dt = rS, where r is the annual rate of interest. (a) Find the amount of money accrued at the end of 8 years when $5000 is deposited in a savings account drawing 5 3/4 % annual interest compounded continuously. (Round your answer to the nearest cent.) $ (b) this is the part I’m having the...
a.       The effective interest rate is 21.44%. If there are 12 compounding periods per year, what...
a.       The effective interest rate is 21.44%. If there are 12 compounding periods per year, what is the nominal interest rate? b.      What is the effective interest rate on a continuously compounded loan that has a nominal interest rate of 25%? c.       Which is the better investment, a fund that pays 20% compounded annually, or one that pays 18.5 % compounded continuously? d.      Money invested at 6% per year, compounded monthly. How money months you need to triple your money?...
Are you invest in a bank account which pays 6% compounded continuously. You withdraw money continuously...
Are you invest in a bank account which pays 6% compounded continuously. You withdraw money continuously at a rate of $4000 per month. Let B be the balance in dollars and T be in time year in years. Suppose you initially start with $3 million. a) set up a differential equation for the situation. Include the initial condition. Do not solve. b) find the equilibrium for the differential equation. Is it stable or unstable?
An initial deposit of $24,000 is made into and account that earns5% compounded continuously. Money is...
An initial deposit of $24,000 is made into and account that earns5% compounded continuously. Money is then withdrawn at a constant rate of $4000 a year until the amount in the account is 0. Find the equation for the amount in the account at any time t. What is the amount 0?
How much money should be deposited annually in a bank account for five years if you...
How much money should be deposited annually in a bank account for five years if you wish to withdraw ​$5,500 each year for three​ years, beginning five years after the last​ deposit? The interest rate is 5% per year.
How much money should be deposited annually in a bank account for five years if you...
How much money should be deposited annually in a bank account for five years if you wish to withdraw $5,000 each year for three years, beginning five years after the last deposit? The interest rate is 3% per year
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT