1. Limited time only! Sign up for a free 30min personal tutor trial with Chegg Tutors
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Future Value of an annuity

Tags:
  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

    tiny-tim

    User Avatar
    Science Advisor
    Homework Helper

    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

    User Avatar
    Science Advisor
    Homework Helper

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

    RGV
     
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook