Compute how much money you would need to invest each year in the future for u+ 20 years in order to have $1 million in u+20 years if you earn 8.29 per year% U=12
Compute how much money you would need to invest each year in the future for u+ 20 years in order to have $1 million in u+20 years if you earn 8.29 per year% U=12
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Compute how much money you would need to invest each year in the future for u+ 20 years in order to have $1 million in u+20 years if you earn 8.29 per year%
U=12
Expert Solution
Introduction and Formula
Solution:-
When an equal amount is invested each period, it is known as annuity.
We know, future value of annuity = PMT x [(1+r)n – 1] / r
where, PMT = equal periodic amount
r = periodic interest rate
n = number of periods
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