Help with 3 math problems

C

chaz

New member
Joined
Jan 21, 2006
Messages
5
first one is:
how much would you deposit today in a savings account that earns 11%, in order that you can make equal annual withdrawals of $800 each at the end of each of the next 15 years?

Next one :
Interest revenue for 120 days on a 6%,180-day note receivable with a face valve of $20,000?

the last one is:
Calculate the future valve of equal semi-annual payments of $9,000 at 14% compounded semiannually for 3 years?

I would like to know how you came up with the answers to each of the problems this way it would make sense. Thank you
 
Sorry, but I ain't helping until you show some effort;
what are the formulas?
AND: why would you be given those problems if you have no idea how to solve?
 
I understand your point of view.Lets see if I can explain:

I'm not looking for the answers just the formula on how to do it.
 
Chaz, look hard in your book or try google for the formulas. They should be easy to find.
 
The book that I'm using is about Financial accounting and does not go into the formulas. I've tried to google but was unable to find the formulas that I was looking for. Being that I've been out of school for a long time I don't remember the formulas.

This classes thaI'm taking on distance learning classes so the support is very limited.
 
chaz said:
The book that I'm using is about Financial accounting and does not go into the formulas. I've tried to google but was unable to find the formulas that I was looking for. Being that I've been out of school for a long time I don't remember the formulas.
This classes thaI'm taking on distance learning classes so the support is very limited.
Click to expand...
Ok; here's the 1st one; let me (or us!) know if you follow it...

"how much would you deposit today in a savings account that earns 11%, in order that you can make equal annual withdrawals of $800 each at the end of each of the next 15 years?"

d = deposit today (?)
w = withdrawal (800)
i = interest (.11)
n = number of years (15)
Formula:
d = w(1 - x) / i where x = 1 / (1 + i)^n : ^ means "to the power"
So:
d = 800(1 - x) / .11 where x = 1 / (1 + .11)^15

x = 1 / (1.11)^15 = .20900436....

d = 800(1 - .20900436...) / .11 = 5752.69556... : so $5,752.70

NOTE: don't get discouraged if you have a problem following what I did:
come back with questions :wink:
 
Denis;

Thank you for your help with that. The only one that I have left is :

Calculate the future valve of equal semi-annual payments of $9,000 at 14% compounded semiannually for 3 years.

Now I know that I did it the long way, but the answer is still not right. Here's what i did:

6months 9,000 X 1.14=10,260 plus 9,000=19,260
1yr 19,260 x 1.14 =21,956 plus 9,000=30,956
1.5 yr 30,956 X 1.14=25,290 plus 9,000=44,290
2y 44,290 X 1.14 =50,490 plus 9,000=59,490
2.5 yr 59,490 x 1.14=67,819 plus 9,000=76,819
3.0 76,819 x 1.14=87,573 plus 9,000 = 96,573

Can you point me in the direction that I did it wrong?
 
chaz said:
Calculate the future valve of equal semi-annual payments of $9,000 at 14% compounded semiannually for 3 years.
Now I know that I did it the long way, but the answer is still not right. Here's what i did:
6months 9,000 X 1.14=10,260 plus 9,000=19,260
1yr 19,260 x 1.14 =21,956 plus 9,000=30,956
1.5 yr 30,956 X 1.14=25,290 plus 9,000=44,290
2y 44,290 X 1.14 =50,490 plus 9,000=59,490
2.5 yr 59,490 x 1.14=67,819 plus 9,000=76,819
3.0 76,819 x 1.14=87,573 plus 9,000 = 96,573
Can you point me in the direction that I did it wrong?
Click to expand...
You can tell you're way over, right?
6 payments of $9000 = $54000; 96573-54000 = 42573 = interest !

Main reasons you're over is:
the payments total 7 instead of 6;
interest is 14% annual, so your calculations should be by 1.07, not 1.14.

The "long way" should look like this (* means times; x no longer used!):
.5: 9000 plus zero interest = 9000 (you get no interest at the date of 1st deposit)
1: 9000 * 1.07 + 9000 = 18630
1.5: 18630 * 1.07 + 9000 = 28934
2: 28934 * 1.07 + 9000 = 39959
2.5: 39959 * 1.07 + 9000 = 51757
3: 51757 * 1.07 + 9000 = 64380 : that's it
64380 - 54000 = 10380, which is total interest paid.

f = future value (?)
p = payment (9000)
i = interest (.07)
n = number of semiannual periods (6)
Formula is:
f = p[(1 + i)^n - 1] / i

f = 9000[(1 + .07)^6 - 1] / .07 = 64379.616...
 
Denis;

Thank you again for your help. At least you told me were I went wrong at and the reasoning. It helps alot knowing what I did wrong.

I thought that I had this problem right, but found out that I was wrong.

Here it is:
Interest revenue for 120 days on a 6%,180-day note receivable with a face valve of $20,000?

Here's what I did.
$20,000*1.06=$1200 in interest for 180 days

90 days is= $600 in interest

So for 120 days it should be $800 right? nope that wasn't the correct answer
where did I go wrong?
 
chaz said:
Here's what I did.
$20,000*1.06=$1200 in interest for 180 days
Click to expand...
No: the $1200 is for a year (or 360 days; I think ALL months = 30 days for notes).
So for 120 days: 120/360 * 1200 = 400.

Any time a rate is quoted, it is ANNUAL (unless otherwise clearly specified).

If the answer is not 400 but close to 400, then a daily method is used, like
.06/365 * 120 * 20000 = 394.52; if that's the case, then problem is badly worded.
 
You must log in or register to reply here.
Top