You are offered the opportunity to put some money away for retirement. You will receive 10 annual payments of $5,000 each beginning in 26 years. If you desire an annual interest rate of 12% compounded monthly, answer the following two questions: How much would you be willing to invest today? How much would the money (that you will be willing to invest today) be worth at the end of your last payment (i.e., in year 35)? Amount that you would be willing to invest today = PV = $5,000/(1.01)26*12 + $5,000/(1.101)27*12 + $5,000/(1.01)28*12 + $5,000/(1.01)29*12 + $5,000/(1.01)30*12 + $5,000/(1.01)31*12 + $5,000/(1.01)32*12 + $5,000/(1.01)33*12 + $5,000/(1.01)34*12 + $5,000/(1.01)35*12 = $1,388.638 Amount that would the money worth at the end of your last payment = FV = $1388.64 * (1+ 0.01)35*12 = $90691.52
Hi There! I solved the problem, but can you correct my written formula to get a total of $90,691.36 please, the answer I got is italicized and underlined below. Please also answer the questions, and put everything on an excel spreadsheet and show the formulas please for all of the questions below. Thank You!
You are offered the opportunity to put some money away for retirement. You will receive 10 annual payments of $5,000 each beginning in 26 years. If you desire an annual interest rate of 12% compounded monthly, answer the following two questions:
- How much would you be willing to invest today?
- How much would the money (that you will be willing to invest today) be worth at the end of your last payment (i.e., in year 35)?
- Amount that you would be willing to invest today =
PV = $5,000/(1.01)26*12 + $5,000/(1.101)27*12 + $5,000/(1.01)28*12 + $5,000/(1.01)29*12 + $5,000/(1.01)30*12 + $5,000/(1.01)31*12 + $5,000/(1.01)32*12 + $5,000/(1.01)33*12 + $5,000/(1.01)34*12 + $5,000/(1.01)35*12
= $1,388.638
- Amount that would the money worth at the end of your last payment =
FV = $1388.64 * (1+ 0.01)35*12
= $90691.52
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Can you correct my written formula to get a total of $90,691.36 please, the answer I got is italicized and underlined below.
1. Amount that you would be willing to invest today =
PV = $5,000/(1.01)26*12 + $5,000/(1.101)27*12 + $5,000/(1.01)28*12 + $5,000/(1.01)29*12 + $5,000/(1.01)30*12 + $5,000/(1.01)31*12 + $5,000/(1.01)32*12 + $5,000/(1.01)33*12 + $5,000/(1.01)34*12 + $5,000/(1.01)35*12
= $1,388.638
2. Amount that would the money worth at the end of your last payment =
FV = $1388.64 * (1+ 0.01)35*12
= $90691.52
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