Asked by anonymous
Determine the principal that must be deposited today to provide for each ordinary simple annuity using the formula: A=(R((1+i)^n-1))/i
a) Payments of $3500 for 7 years at 6.5% per year compounded annually.
My answer:
R=3500, i= 6.5%/100 = 0.065 / 12 months = 0.00541, N = 7*12=84
A=(3500((1+0.00541)^84-1))/0.00541
A = 370772.22
But the answer at the back of my textbook says $19195.82
CAN SOMEONE HELP ME ON THIS QUESTION?
a) Payments of $3500 for 7 years at 6.5% per year compounded annually.
My answer:
R=3500, i= 6.5%/100 = 0.065 / 12 months = 0.00541, N = 7*12=84
A=(3500((1+0.00541)^84-1))/0.00541
A = 370772.22
But the answer at the back of my textbook says $19195.82
CAN SOMEONE HELP ME ON THIS QUESTION?