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 Post subject: tricky questionPosted: Sat, 15 Jan 2011 23:57:49 UTC
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Joined: Sun, 9 Jan 2011 03:12:59 UTC
Posts: 3
i need help with this question:

jane is 20 years old today. jane is going to put \$1000 into her savings account on her 21th birthday and again on every birthday for 20 payments. she earn 5%, paid annually. how much money will be in the account after she collects her interest and makes her 20th payment?

this is my attempt:

i calculate the PV for 19 years first
pmt=1000, n=19, i=5, fv=0, pv=?

pv = 30539

then, calculate the principle 1000 x 19 = 19000
then take 30539- 19000= 11539 interest

so if jane collect interest 11539 on the 19 payment , the remaining in the account is 19000.

she again make last payment 1000 into account on her 40th birthday.
the account would left with 20,000

Am i doing this correct, can anyone give me some guidance.

greatly appreciate.

ann
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 Post subject: Posted: Sun, 16 Jan 2011 05:07:19 UTC
 Member of the 'S.O.S. Math' Hall of Fame

Joined: Sun, 24 Jul 2005 20:12:39 UTC
Posts: 3690
Location: Ottawa Ontario
Ann, were you not given formulas by your teacher?
What you're doing is completely erroneous.

pmt = 1000 ; n = 20 ; i = .05 ; fv = ?
fv = 33,065.9541....

Or by formula:
fv = 1000(1.05^20 - 1) / .05 = 33,065.9541....

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 Post subject: Posted: Mon, 28 Feb 2011 22:14:41 UTC
 S.O.S. Newbie

Joined: Mon, 28 Feb 2011 17:01:43 UTC
Posts: 2
Denis is right. This is a trivial annuity-immediate question. You can google the concept "annuity-immediate." For example: http://en.wikipedia.org/wiki/Annuity_(finance_theory). The formula you need is

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