Ask Question
3 May, 17:09

Cindy Medavoy will invest $7,990 a year for 19 years in a fund that will earn 10% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 19 years? If the first payment occurs at year-end, what amount will be in the fund in 19 years? (Round factor values to 5 decimal places, e. g. 1.25124 and final answers to 0 decimal places, e. g. 458,581.)

+4
Answers (1)
  1. 3 May, 19:43
    0
    The correct answer for future value if first payment occur today is $449,645.24 and if first payment occur at the end of year is $408,761.13.

    Explanation:

    According to the scenario, the given data are as follows:

    Payment (pmt) = $7,990

    Rate of interest (r) = 10%

    Time (n) = 19 years

    So, we can calculate the future value by using following formula:

    Future Value (if payment occurs today):

    FV = Pmt (((1+r) ^n - 1) : r) x (1+r)

    By putting the value:

    = $7,990 (((1 + 0.10) ^19 - 1) :.10) * (1 + 0.10)

    = $7,990 (51.16) * (1.10)

    = $449,645.24

    Future Value (if payment occurs at the end of year):

    FV = Pmt x ((1+r) ^n - 1)) : r)

    = $7,990 ((1 + 0.10) ^19 - 1) : 0.10)

    = $7,990 * 51.16

    = $408,761.13
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Cindy Medavoy will invest $7,990 a year for 19 years in a fund that will earn 10% annual interest. Click here to view factor tables If the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers