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26 August, 11:53

Use the future value formula to find the indicated value. FV=11,000 ; i=0.02 ; PMT = $200 ; n=? n (round up to the nearest integer as needed)

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  1. 26 August, 11:59
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    Hi there

    The formula of the future value of annuity ordinary is

    Fv=pmt [ (1+r) ^ (n) - 1) : r]

    Solve the formula for n

    Fv/pmt = (1+r) ^ (n) - 1) : r

    cross multiplication

    (Fv/pmt) * r = (1+r) ^ (n) - 1

    (Fv/pmt) * r+1 = (1+r) ^ (n)

    take the log for both sides

    Log ((Fv/pmt) * r+1) = n*log (1+r)

    Divide each side by log (1+r)

    N=[Log ((Fv/pmt) * r+1) ]:log (1+r)

    Now solve to find n

    N=log ((11,000:200) * 0.02+1)

    :log (1+0.02)

    =37.47 years round your answer to get 37 years

    Good luck!
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