Question
Suppose you can afford $11,700 per year to invest into a savings annuity. Write this value down, as you'll be using it throughout this entire
Suppose you can afford $11,700 per year to invest into a savings annuity. Write this value down, as you'll be using it throughout this entire problem. We are going to explore various options and how these options will impact the interest you are making.
Payment Frequency
Monthly
If you deposit your available money on a monthly basis, how much are you depositing per month? $
If you are earning 6.4% annual interest, what is the total value of the annuity at the end of 30 years? $
How much interest is earned at the end of 30 years? $
Weekly
If you deposit your available money on a weekly basis, how much are you depositing per week (52 weeks per year)? $
If you are earning 6.4% annual interest, what is the total value of the annuity at the end of 30 years? $
How much interest is earned at the end of 30 years? $
Rate
r = 6.4%
If you are making monthly deposits from your available funds, what is the total value in your annuity at the end of 30 years, given the rate is 6.4%? $
How much interest did you earn? $
r = 6.9%
If you are making monthly deposits from your available funds, what is the total value in your annuity at the end of 30 years, given the rate is 6.9%? $
How much interest did you earn? $
r = 7.4%
If you are making monthly deposits from your available funds, what is the total value in your annuity at the end of 30 years, given the rate is 7.4%? $
How much interest did you earn? $
Time
25 years
If you make monthly deposits at an annual rate of 6.4%, what is the total value in the account after 25 years? $
How much interest did you earn? $
30 years
If you make monthly deposits at an annual rate of 6.4%, what is the total value in the account after 30 years? $
How much interest did you earn? $
35 years
If you make monthly deposits at an annual rate of 6.4%, what is the total value in the account after 35 years? $
How much interest did you earn? $
40 years
If you make monthly deposits at an annual rate of 6.4%, what is the total value in the account after 40 years? $
How much interest did you earn? $
Conclusion
Which factor had the greatest impact on the amount of interest that you earned? Select an answer Payment Frequency? Rate? Time?
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Managerial Accounting Creating Value In A Dynamic Business Environment
Authors: Ronald Hilton, David Platt
13th Edition
1264100698, 9781264100699
