4. Use the TVM Calculator to fill in the following table given that the APR is 6%. Round to 2 decimal places as needed. PV = PMT= FV= = = APR = Periods CHANGES = Compounding: CHANGES Principal $1,000 $1,000 $1,000 $1,000 $1,000 Compounding Periods Annually Semiannually Monthly Weekly Previously, we used the formula A = P Daily 1 2 12 52 a. What did P represent in the compound interest formula? P = regular deposit amount 365 Amount after 1 year $1060 $1060.90 $1061.68 $1061.80 If we summarize the effect seen in the table, we see that more compoundings per year means that you will have more money in the account, but the amount of increase will eventually level off. Most banks publish the APY, or Annual Percentage Yield, instead of the APR to account for this effect. $1061.83 Extension 5. What are some financial goals that people save for? Some financial goals people save for are a house, vacation, college, etc.... 6. Suppose that Ruby's employer offers a retirement plan. Ruby decides to invest $350 per month into the account. The interest is compounded monthly. Historically, the account has earned 7% APR. Ruby is interested in how much money she will have if she retires in 25 years. P(1 + APR) (Y) to calculate compound interest.
4. Use the TVM Calculator to fill in the following table given that the APR is 6%. Round to 2 decimal places as needed. PV = PMT= FV= = = APR = Periods CHANGES = Compounding: CHANGES Principal $1,000 $1,000 $1,000 $1,000 $1,000 Compounding Periods Annually Semiannually Monthly Weekly Previously, we used the formula A = P Daily 1 2 12 52 a. What did P represent in the compound interest formula? P = regular deposit amount 365 Amount after 1 year $1060 $1060.90 $1061.68 $1061.80 If we summarize the effect seen in the table, we see that more compoundings per year means that you will have more money in the account, but the amount of increase will eventually level off. Most banks publish the APY, or Annual Percentage Yield, instead of the APR to account for this effect. $1061.83 Extension 5. What are some financial goals that people save for? Some financial goals people save for are a house, vacation, college, etc.... 6. Suppose that Ruby's employer offers a retirement plan. Ruby decides to invest $350 per month into the account. The interest is compounded monthly. Historically, the account has earned 7% APR. Ruby is interested in how much money she will have if she retires in 25 years. P(1 + APR) (Y) to calculate compound interest.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:1122/Xv7zYW5RnILBBINV2A9egx/unit-4-project-tvm-calculator-pdf?pg=7
gn -
An annuity any series or equal, regular payments. Some annuines are used to neip people save
money, like for college or retirement, as with Ruby's retirement plan in our opening discussion. We
will focus on these types of savings plans in this portion of the project. The Savings Plan formula is
below:
Y =
APR =
A = PMT-
n =
A =
n
((1+ APR)
(APR)
Note: This formula assumes that the payment period and compounding period are the same. For
example, monthly payments would indicate monthly compounding.
Let's work an example with the savings plan formula and the TVM calculator.
Example 3
Suppose that Ruby's employer offers a retirement plan. Ruby decides to invest $350 per month into the
account. The interest is compounded monthly. Historically, the account has earned 7% APR. How
much will be in his account if she retires in 25 years?
Fill out the value for each variable, and put a question mark for the value we need to solve for.
PMT=
1
PMT= regular payment amount (deposit)
Y = number of years
APR = annual percentage rate (written as a decimal)
n = number of times the interest is compounded per year
A total amount in the account
(written as a decimal)
Use the Savings Plan formula to solve for your answer. Do not round any decimals until the very
end! Then, round to the nearest cent.
shift
4
ctrl
Transcribed Image Text:DocHub X D Unit 4 Project - TVM Calculator X
b.com/claudiasirois1122/Xv7zYW5RnILBBINV2A9egx/unit-4-project-tvm-calculator-pdf?pg=6
>
✓Sign -
O Ri
+
4. Use the TVM Calculator to fill in
the following table given that
the APR is 6%. Round to 2
decimal places as needed.
PV =
PMT=
FV =
APR =
Periods CHANGES
=
Compounding: CHANGES
Principal Compounding Periods
$1,000
D
$1,000
$1,000
$1,000
$1,000
Annually
Semiannually
Monthly
Weekly
Daily
1
2
12
a. What did P represent in the compound interest formula?
P = regular deposit amount
52
shift
Amount after 1
year
enter
If we summarize the effect seen in the table, we see that more compoundings per year means that
you will have more money in the account, but the amount of increase will eventually level off. Most
banks publish the APY, or Annual Percentage Yield, instead of the APR to account for this effect.
$1060
$1060.90
365 $1061.83
Extension
5. What are some financial goals that people save for?
Some financial goals people save for are a house, vacation, college, etc....
$1061.68
6. Suppose that Ruby's employer offers a retirement plan. Ruby decides to invest $350 per month
into the account. The interest is compounded monthly. Historically, the account has earned 7%
APR. Ruby is interested in how much money she will have if she retires in 25 years.
$1061.80
Previously, we used the formula A = P(1 +4PR) to calculate compound interest.
(NY)
ctri
4
?
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