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  1. #1
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    Exclamation help

    Jane Frost wants to receive yearly payments of $15,000 for 10 years. How much mush she deposit at her bank today at 11% interest compounded annually?
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  2. #2
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    Quote Originally Posted by jjen1978 View Post
    Jane Frost wants to receive yearly payments of $15,000 for 10 years. How much mush she deposit at her bank today at 11% interest compounded annually?
    I cant really tell you because i dont know for how long she intends to invest the money.

    But A = P(1 + r/100)^n

    If she wants $15 000 annually for 10 years, we can assume she wants $150 000 at the end of the investment period.

    So 150 000 = P(1 + 11/100)^n

    And then we can say that P = (n-root(150 000)) / 1,11

    P is the initial amount invested
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  3. #3
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    Quote Originally Posted by jjen1978 View Post
    Jane Frost wants to receive yearly payments of $15,000 for 10 years. How much mush she deposit at her bank today at 11% interest compounded annually?
    Hi! I am trying to say..
    Compound interest = P [1 + r/100]^n - P
    P = $15,000 , n = 10 , r = 11%

    Therefore,
    Compound interest = 15000[1+11/100]^10-15000
    = 15000 [111/100]^10 - 15000
    = 15000[1.11]^10 -15000
    = 15000[2.83942]-15000
    = 42591.315 - 15000
    = 27591.314
    may be jane frost receive
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  4. #4
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    read it right?

    If I read that right, she is taking out 15,000 every year thus she no longer gains interest when it is taken out.

    I suggest working backwards, since you know she has $0 at the end.

    On year 9 before the interest she has less than 15,000.

    15,000 = x * 1.11, where x is the amount the year before still in the bank.

    thus x = 15,000 / 1.11

    Ok so now she had taken out 15,000 at year 9, so to get to year 8.

    add the 15,000 to x from year 9.

    15,000 / 1.11 + 15,000 , this is the amount before she withdrew her money.

    now with this number you can find the amount at the beginning of year 8 before gaining interest (x).

    15,000/1.11 + 15,000 = x * 1.11

    thus x = (15,000/1.11 + 15,000)/1.11

    now go through that 8 more times and your golden.
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