Value Worksheet With Answer Key (Page 5 of 8) in pdf

Value Worksheet With Answer Key Page 5

8.5

120 000 5 R 3(1.12)

2 14

I needed to solve for R, so I multiplied

each side by 0.12.

120 000

R 5

I isolated R by dividing both sides by

3 (1.12)

2 14

the expression in square brackets.

5 7499.97

I solved for R by simplifying the

The investor needs to deposit

right side.

$7499.97 annually.

Pradesh’s Solution: Using the TVM Solver

I wanted to solve for the payment, so

I entered 0 for PMT.

I entered 25 beside N for 25

compounding periods and 12 beside

I% for an annual interest of 12%.

PV is not required, so it is 0. I entered

1 000 000 beside FV for the desired

savings after 25 years.

Since the payments are made once a

year and compounded annually, P/Y

and C/Y are 1.

I placed the cursor beside PMT

because I was solving for the

payments.

I solved for PMT. The payments are

negative because the investor pays

them.

25 3 $7499.97 5 187 499.25

There are 25 deposits of $7499.97.

Over 25 years, the deposits total

I calculated the total amount deposited

$187 499.25.

and subtracted it from the final

1 000 000 2 187 499.25

amount of $1 000 000.

5 812 500.75

$812 500.75 of the $1 000 000

is interest earned.

497

NEL

Solving Financial Problems Involving Exponential Functions

Value Worksheet With Answer Key Page 5

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