Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interestof 6% compounded monthly.which of the answers in the picture is wright and why Accumulated balance = P*[(1+R)N-1]/R= 30* [(1+0.0050)60.-1]/0.0050= 30* [(1.005060-1]/0.0050= 30*[1.3488501525493-1]/0.0050= 30*0.3488501525493/0.0050= 30*69.77003050986= 2093.10HenceAccumulated balance =$ 2093.10 Calculate the accumulated value as follows:Monthly payment = 30No of months= 60Rate = 6%Monthly rate = 6%/2= 0.5%(1+ rate)ime)x(1+ rate)4)x(1+ 0.5%)')×( 1.00)Future value of annuity due = annuity ×rate(1+0.5%y"= 30 x0.5%(1.005) -1= 30 x:) × ( 1.0050.005*( 1.005)1.3488-1= 30 x (0.0050.3488= 30 x) × ( 1.0050.005= $2, 103. 57

Monthly payment = 30 Annual interest rate = 6% Monthly interest rate = 6%/12Months = 0.50% Period of…

Answered: Determine the accumulated value of a…

Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interest of 6% compounded monthly.

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

Determine the accumulated value of a 60-month annuity immediate with monthly payments of 30 using a nominal interest

of 6% compounded monthly.

which of the answers in the picture is wright and why

Accumulated balance = P*[(1+R)N-1]/R
= 30* [(1+0.0050)60.-1]/0.0050
= 30* [(1.005060-1]/0.0050
= 30*[1.3488501525493-1]/0.0050
= 30*0.3488501525493/0.0050
= 30*69.77003050986
= 2093.10
Hence
Accumulated balance =$ 2093.10

Calculate the accumulated value as follows:
Monthly payment = 30
No of months= 60Rate = 6%
Monthly rate = 6%/2
= 0.5%
(1+ rate)ime
)x(1+ rate)
4)x(1+ 0.5%)
')×( 1.00)
Future value of annuity due = annuity ×
rate
(1+0.5%y"
= 30 x
0.5%
(1.005) -1
= 30 x
:) × ( 1.005
0.005
*
( 1.005)
1.3488-1
= 30 x (
0.005
0.3488
= 30 x
) × ( 1.005
0.005
= $2, 103. 57

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