interest/retirement account problem

[Uber Fr0g]

Ive already calculated all this and gotten answers, but my math isnt as up to par as it used to be can someone do a few parts of this( or all) and post back some answers for me to compare too.

Assuming that i am 18 1/3 years old. Use the value formula:
compound monthly

FV= PMT(1+i)^n-1/i
example fv = $1(1+.05/12)^560-1/i
= $1 (1.00416667)^560-1/.00416667

FV= future value(amount)
PMT= periodic payment
i= rate per period example: .05/12= .00416667
n= number of payments (periods)

calculate the amount i would have in a retirement account when i reach exactly 65 years of age(for example if i am 18 years and 3 months old i would have 46 3/4 years * 12 months or n = 561 payments). Do the calculations for each of monthly payments of $1, $50, $100. For each of the payments amounts, do the calculations for each of the interests rates of 5% 10%,and 15%. In other words there will be 9 different future values.

Any and all help would be appreciated

 

[tkhunny]

FV= PMT(1+i)^n-1/i = PMT

calculations for each of monthly payments of $1, $50, $100.
for each of the interests rates of 5% 10%,and 15%.

Your notation needs some help. Please add lots of parentheses to clarify meaning.

FV = PMT*([(1+i)^n] - 1)/i - for example

I really don't know what that last "PMT" is doing out there.

The values for $1, $50 and $100 are proportional. The other two should be simple after doing the first.

Show us what you get. We'll do the comparing.

 

[Denis]

AS TK says, you only need to do the $1 case:

FV = [(1 + i)^n - 1] / i

That'll give you the answer for a PMT = $1.

Multiply that by any PMT to get answer for that PMT.

 

[Uber Fr0g]

i completely forgot to post what i have, sorry lol.
i didnt know wether or not it was best to just round out the percents when i didvided them by 12(the number of months in a year)or not....so i left them kinda long.
i used 560 as n..(the number of months i will be making payments)
so basically when i calculated for $1 i did 1.00416667^560= 10.2624083296 then -1= 9.26240832954/.00416667= 2222.97622071 for my answer of $1 a month for 560 months at 5% interest,and so on for the rest.

when i divided 5% by 12-the number of months in a year i used: .00416667

when i did the same for 10% i
used: .008333

when i did the same for 15% i
used: .0125


my answers are
$1 at 5% = 2222.97622071
$1 at 10% = 12394.9074943
$1 at 15% = 83925.523689

$5 at 5% = 111148.811035
$5 at 10% = 619745.374717
$5 at 15% = 4196276.18445

$10 at 5% = 222297.622071
$10 at 10% = 1239490.74943
$10 at 15% = 8392552.3689


are these anywhere close to being right, or should i round when i have to divide the interest rate times 12 months in the equation. please help...im new to this business stuff lol.

 

[tkhunny]

I'm a little curious why you used 560, rather than the 561 you calculated earlier. Use what you have.

Whatever you are using to calculate, you may wish to check and make sure you know what kind of precision you are getting. It looks like you are going to a lot of trouble to use lots of decimal places, but you are getting only about 3.

It does look like your arithmetic is good.

 

[Uber Fr0g]

the 561 was the example in the problem i was given, it said if i was 18 years and 3 months i would be 46 3/4 years from the age 65(retirement). We have to use our own age. So since i am 18 years and 4 months old i used 18 2/3 years wich is 560 months.

 

[tkhunny]

I was pretty tired before reading that far. It is not surprising that I missed it. Good work. Check that calculator.

 

[Denis]

559,560,561...who cares? that's not really the point...

We're trying to tell you that you can use the future value of $1 to
get the future value of any other amount: did you get/follow that?