Answer:
Step-by-step explanation:
How much do you need to deposit in an account today, if you want to have $30,000 in the account in 5 years, assuming the account earns 8% interest rate annually?
PV = FV/(1+R)^n = 30000/(1+0.08)^5 = $20,417.5
b. If you deposit $22,000 in the account today, what rate of interest would you need to earn annually in order to have exactly $30,000 in the account in 5 years?
PV = FV/(1+R)^n
22,000 = 30000/(1+r)^5 = 22000(1+r)^5 =30000
divide both sides by 22000
1+r^5 = 1.36
Take the 5th root of both sides
1+r = 5√1.36
Therefore r = (5√1.36) - 1 = 4.83% approximately 5%
c. Assuming your account earns 0.5% interest rate every month, and that you make an initial deposit of $10,000 today, how much do you need to deposit every month in your account in order to have exactly $30,000 in 5 years?
Step 1
The initial deposit of $10,000 will yeild an interest of (10,000*0.5%*12*5) = 3000
Total=13,000
Step 2
The balance of 17,000 can be generated using the PMT excel formula
Enter = =PMT(r,n,pv)
PV 17000
r 0.50%
n 60
Monthly Amount = -£328.66