ansonguyguy
New member
- Joined
- Apr 24, 2018
- Messages
- 2
I have trouble with the math problem below.
(ex) Susan has accumulated $50000 in her savings account. She plans to deposit $100 a month to her account which pays an annual interest rate of 6% compounded monthly. How much will she have in her account in 20 years?
This is how I do it. I am using two formulas.
(1) FV = D*[((1+r/n)^(nt))/(r/n)]
(2) A = P*(1+r/n)^(nt)
where FV is future value, D regular payment, r interest rate, n the number of compounding periods, t elapsed time, P principal and A the accumlated amount.
First, I plug these values in the first formula: D=100, r=0.06, n=12, t=20.
So, I get FV=$46204.09
Next, I plug these values in the second formula: P=FV+50000, r=0.06, n=12, t=20.
Therefore, A=$671789.39.
But, the answer key says $211714.31.
Could someone please explain how to do this problem? Thanks a lot.
(ex) Susan has accumulated $50000 in her savings account. She plans to deposit $100 a month to her account which pays an annual interest rate of 6% compounded monthly. How much will she have in her account in 20 years?
This is how I do it. I am using two formulas.
(1) FV = D*[((1+r/n)^(nt))/(r/n)]
(2) A = P*(1+r/n)^(nt)
where FV is future value, D regular payment, r interest rate, n the number of compounding periods, t elapsed time, P principal and A the accumlated amount.
First, I plug these values in the first formula: D=100, r=0.06, n=12, t=20.
So, I get FV=$46204.09
Next, I plug these values in the second formula: P=FV+50000, r=0.06, n=12, t=20.
Therefore, A=$671789.39.
But, the answer key says $211714.31.
Could someone please explain how to do this problem? Thanks a lot.