5. Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8% annually. Using the tables in the Business Math Handbook that accompanies the course textbook, determine the final value of Joe's investment at the end of the 20th year on this ordinary annuity.
Please help!
What did you find in the Handbook?
Haven't seen anybody use tables out of "handbooks" in over 30 years, ....
amount = 9000(1.08^20 - 1)/.08
= 9000(45.7619643) ---> last number should be in your handbook
= $411,857.68
To determine the final value of Joe's investment at the end of the 20th year, we can use the formula for the future value of an ordinary annuity. The formula is:
FV = P [(1 + r)^n - 1] / r
where:
FV = future value
P = periodic payment (amount invested at the end of each year)
r = interest rate per period (annual interest rate divided by the number of periods in a year)
n = number of periods (number of years in this case)
In this question, the periodic payment (P) is $9,000, the interest rate (r) is 8% or 0.08, and the number of periods (n) is 20.
Plugging these values into the formula, we get:
FV = 9000 [(1 + 0.08)^20 - 1] / 0.08
Calculating the future value using a calculator or spreadsheet, we find that Joe's investment at the end of the 20th year has a value of $355,550.63.
Therefore, the final value of Joe's investment at the end of the 20th year is $355,550.63.
To determine the final value of Joe's investment at the end of the 20th year, we can use the formula for the future value of an ordinary annuity:
FV = P * ((1 + r)^n - 1) / r
Where:
FV is the future value of the investment
P is the periodic payment amount (which is $9,000 in Joe's case)
r is the interest rate per period (which is 8% or 0.08 in decimal form)
n is the number of periods (which is 20 in Joe's case)
Plugging in the values, we have:
FV = 9,000 * ((1 + 0.08)^20 - 1) / 0.08
Now we can solve this equation to find the final value of Joe's investment. Let's do the math:
FV = 9,000 * ((1.08)^20 - 1) / 0.08
FV = 9,000 * (4.661 - 1) / 0.08
FV = 9,000 * 3.661 / 0.08
FV = 411,495
Therefore, the final value of Joe's investment at the end of the 20th year on this ordinary annuity is $411,495.