500(1.015)^20 + x(1.015)^16 = 1000
1.268985... = 326.572..
x = $257.35
Jane invests 500 at t=0 at a nominal annual interest rate of 6%, compounded
quarterly. What additional amount will she need to invest at t=2 in order to have a total of 1,000 at t=5?
3 answers
I miscounted on my "time line"
should have been:
500(1.015)^20 + x(1.015)^12 = 1000
...
x = $273.14
should have been:
500(1.015)^20 + x(1.015)^12 = 1000
...
x = $273.14
amount at end of t = 2
= 500(1.015)^8
= 563.25
add additional payment of 273.14
= 836.39
amount of that after 3 more years
= 836.39(1.015)^12
=999.9986..
not bad, eh?
= 500(1.015)^8
= 563.25
add additional payment of 273.14
= 836.39
amount of that after 3 more years
= 836.39(1.015)^12
=999.9986..
not bad, eh?