# Finance

You wish to deposit an amount now that will accumulate to \$100,000 in 10 years. How much less would you have to deposit if the rate of interest was 8% compounded monthly versus annually?

So ive tried doing this question but I cant seem to get the final answer which is supposed to be \$1267. Im using my financial calculator to solve the question but I have no idea how to do this question. I know we are solvin for pv (present value) but Im not getting the answer. Ive looked through my notes and we dont have any question worded like this. help please

1. 👍
2. 👎
3. 👁
1. Po(1+r)^n = 100,000.
r = 0.08/12 = 0.00666667 = monthly % rate.
n = 1comp./mo * 120mo, = 120 compounding periods.

Po(1.00666667)^120 = 100,000.
Po = \$45,052.33 = initial dep.

Po(1+r)^10 = 100,000.
Po(1.08)^10 = 100,000.
Po = \$46,319.35.

46,319.35 - 45,052.33 = \$1267.02. Less.

1. 👍
2. 👎

## Similar Questions

1. ### Math

You borrow \$2,000 for a period of 4 years. You are charged simple interest at a rate of 3%. How much will you repay at the end of 4 years? So, do I draw out the formula I = P x R x T. I = Interest - unknown P = Principal - 2,000 R

2. ### MATH

1. An employee put \$5,000.00 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. Which amount is closest to the interest the employee will have earned at

3. ### Math

Jessica wants to accumulate \$15,000 by the end of 4 years in a special bank account, which she had opened for this purpose. To achieve this goal, Jessica plans to deposit a fixed sum of money into the account at the end of the

Nancy would like to accumulate \$10,000 by the end of 3 years from now to buy a used car from her friend,Jin. She has \$2,500 now and would like to save equal annual end of year deposits to pay for the car. Calculate how much should

1. ### Finance

You can deposit 10,000 into an account paying 9% annual interest either today or exactly 10 years from today. How much better off will you be at the end of 40 years if you decide to make the initial deposit today rather than 1o

2. ### mth 156

a company needs \$55,000 in 7 years for a new addition. To meet this goal, the company needs to deposit money in an acct today that pays 5% annual interest compounded quarterly. What amount should the company invest to total

3. ### Economics - Finance

If your bank pays 5.5 percent interest on savings deposits, what is the simple interest paid in the third year on an initial \$100 deposit? What is the total amount in the account after three years? What is the amount after three

You need to have \$50,000 at the end of 10 years. To accumulate this sum, you have decided to save a certain amount at the end of each of the next 10 years and deposit it in the bank. The bank pays 8 percent interest compounded

1. ### computer science

When \$1000 is deposit at 5% simple interest, the amount grows by \$50 each year. When money is invested at 5% compound interest, then the amount at the end of each year is 1.05 times the amount at the beginning of the year. Write a

2. ### Math

A person wants to establish an annuity for retirement purposes. He wants to make quarterly deposits for 20 years so that he can then make quarterly withdrawals of \$5,000 for 10 years. The annuity earns 7.32% interest compounded

3. ### Math

Tri-Star Airlines intends to pay off a \$20,000,000 bond issue that comes due in 4 years. How much must the company set aside now, at 6 % interest compounded quarterly, to accumulate the required amount of money?