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Homework Help: Future Value of an annuity

  1. Oct 22, 2012 #1
    1. The problem statement, all variables and given/known data
    Mike needs $12.000 in 5 years. How much must he deposit at the end of each month for 5 years in an account paying 2.9% compounded monthly so that he will have $12.000 in 5 years?

    2. Relevant equations

    FV formula: S=R*((1+i)^n -1)/i

    I think that is the correct formula

    3. The attempt at a solution

    Honestly i dont have a clue on this....please help!!!
  2. jcsd
  3. Oct 22, 2012 #2


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    Hi Niaboc67! :smile:

    (try using the X2 and X2 buttons just above the Reply box :wink:
    Yes, that is the correct formula,

    because it equals R*∑k=0n-1 (1+i)k. :smile:

    However, you'll never remember that formula in the exam, so you need to be able to derive it yourself,

    sooo …

    i] can you prove that the two formulas are the same?

    ii] can you see why the second formula works? :wink:
  4. Oct 22, 2012 #3

    Ray Vickson

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    Well, if you know i and n you just have a computation to perform.

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