14. 0-1 points WaneFMAC6 2.3.055 My Notes Ask Your Te You wish to accumulate $10

Question

14. 0-1 points WaneFMAC6 2.3.055 My Notes Ask Your Te You wish to accumulate $100,000 through monthly payments of $900. If you can earn interest at an annual rate of 4% compounded monthly, how long (to the nearest year) will it take to accomplish your goal? yr Need Help Read It | Talk to a Tu 15. -11 points WaneFMAC6 2.3.057 My Notes: Ask Your Tea You have a $1,000 credit card debt, and you plan to pay it off through monthly payments of $25. If you are being charged 159% interest per year, how long (to the nearest 0.5 years) will it take you to repay your debt? yr Need Help? Lenten -kto·Tutor

Explanation / Answer

14) Future value formula or annuity due

FV = A x (1+R) x (((1+R) ^ n) – 1)/R

here R = 4%/12 = .0033

n= to be calculated

FV = 100,000

A=900

So

100000=900(1.0033)*((1.033)^n-1)/.0033

330 = 902.97*((1.033)^n-1)

1.365 = 1.033^n

taking

ln1.365 = n ln1.033

0.3115 = n * .0324

so n = 9.6 years

15) Similar way to solve this prob

FV = A x (1+R) x (((1+R) ^ n) – 1)/R

1000 = 25 * (1+.0125)*((1.0125^n-1)/.0125

1.049 = 1.0125^n

thus n = 3.85 years

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