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Question 14
Question 14. Come up with a problem that would require you to use the following equation in order to solve that problem. In other words, write a problem by yourself and do not copy from lecture materials and homework assignments. Explain the problem first. After you defined and wrote the problem of your choice, please solve it using the following equation. Write all step-by-step solution. If you provide just correct final answers, you will get only 10 percent credit of this question. (20 Points) (1 + i)N - 1 USCAFE A A A Finding the future compounded amount (F) at the end of a specified period due to annual payments (A) given the interest rate I F = A x USCAF Uniform series compound amount factor, USCAF (i%, N) 0 1 2 N-1 N F = ?
Expert Solution
Answer:
Issue: A graduate(23 yrs old enough) finds another line of work of good compensation and as he learnt through his educators that he needs to spare $15,000 consistently in a benefits reserve till his retirement( state 53 yrs) to lead a comfortable retirement life, discover the sum he will be left with accepting his plan guarantees him a fixed yearly return of 6% consistently till his retirement
Arrangement:
As the individual resigns subsequent to working for 53-23 = 30 yrs
likewise accepting he stores the cash of $15000 consistently toward the finish of every year
We can relate his last investment funds to Future worth F = A x USCAF
where An is his yearly store cash A= 15000$
USCAF is to be determined for interest rate i=6% and N=30 years
USCAF=\frac{(i+1)^N-1}{i}=\frac{1.06^{30}-1}{0.06}=79.058
Future worth F=A\times USCAF=\$15000\times79.058=\$1,185,872.79
so he will be left with ~$1.18 million when he resigns at age 53
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