If you invest $5,000 annually for the next 20 years and earn 9% per year (20...
If you invest $5,000 annually for the next 20 years and earn 9% per year (20 deposits, annuity, AER rate) . .
| A. How much will you have at the end of the 20th year (T20), if the first deposit is 1 year from now (at T1) ? |
| B. How much will you have at the end of the 20th year, if the first deposit is made immediately (at T0) ? |
Homework Answers
Future Value if first deposit is made 1 year from now=Annual amount/rate*((1+rate)^t-1)
Future Value if first deposit is made now=Annual amount/rate*((1+rate)^t-1)*(1+rate)
1.
=5000/9%*(1.09^20-1)=255800.598209905
2.
=5000/9%*(1.09^20-1)*1.09=278822.652048797
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