If a person wishes to receive 1000 1
CCU at the end of fifteen years at a
return of 6.0% per annum
compounded, he will have to save
CCU today.
A = P(1+r)^t
plug in your numbers and solve for P
To calculate the amount that needs to be saved today, we can use the future value of a lump sum formula. The formula is:
FV = PV * (1 + r)^n
Where:
FV = Future Value
PV = Present Value (the amount to be saved today)
r = Interest rate per compounding period (in this case, 6% which is equivalent to 0.06)
n = Number of compounding periods (in this case, 15 years)
Now, let's plug in the given values and solve for PV:
FV = 1000
r = 0.06
n = 15
1000 = PV * (1 + 0.06)^15
To isolate PV, we divide both sides of the equation by (1.06)^15:
PV = 1000 / (1.06)^15
Using a calculator, we can evaluate (1.06)^15 to be approximately 2.579 hbe.
PV = 1000 / 2.579
PV = 387.77
Therefore, the person will have to save approximately 387.77 CCU today to receive 1000 CCU at the end of fifteen years at a return of 6.0% per annum compounded.
To find out how much the person needs to save today in order to receive 1000 CCU at the end of fifteen years at a 6.0% per annum compound interest rate, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A represents the future value (1000 CCU),
P represents the present value (the amount to be saved today),
r represents the interest rate (6.0% or 0.06), and
t represents the time period in years (15).
Since the interest is compounded annually, we can plug these values into the formula:
1000 = P(1 + 0.06/1)^(1*15)
Simplifying this equation, we have:
1000 = P(1.06)^15
To isolate the value of P, divide both sides of the equation by (1.06)^15:
P = 1000 / (1.06)^15
Using a calculator to evaluate this expression, we can find the value of P. The answer will be the amount that the person needs to save today in CCU in order to receive 1000 CCU at the end of fifteen years at a 6.0% annual compound interest rate.