Question

use both the annuity and the amortization formula.

1.) Sharon is 45 years old and wants to retire at 65. She wishes to make monthly deposits in an account paying 9% compounded monthly so when she retires she can withdraw $1000 a month for 20 years. How much should she deposit each month?

2.) David works during the summer to help with expenses at school the following year. He is able to save $250 each week for 12 weeks, and he invests it at an annual rate of 7% that is compounded monthly. When school starts, David will begin to withdraw equal amounts from this account each week. What is the most David can withdraw each week for 34 weeks?

can I get some help please?

Answer 1

1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 1000*((1-(1+ 9/1200)^(-20*12))/(9/1200))

PV = 111144.95

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

111144.95= Cash Flow*(((1+ 9/1200)^(20*12)-1)/(9/1200))

Cash Flow = 166.41

Please ask remaining parts seperately, questions are unrelated