Future value of annuity (1 Viewer)

[rach_1]

i cant do this question:

michael and libby save 10% of their net income per week. They open an account earning 7.8%p.a compunded weekly and plan to have $85000 at the end of 6 years. What is their net income per week?

i think i have formula right but i cant seem to get the correct answer so im probably doing something wrong..

 

[S13WPN]

i cant do this question:

michael and libby save 10% of their net income per week. They open an account earning 7.8%p.a compunded weekly and plan to have $85000 at the end of 6 years. What is their net income per week?

i think i have formula right but i cant seem to get the correct answer so im probably doing something wrong..

A = M {(1+r)^n - 1 / r}

85000 = M {1.0015^312 - 1 / 0.0015}

M = 85000 / {1.0015^312 - 1 / 0.0015}

M = $213.84

Net income per week = $2138.40

 

[PC]

michael and libby save 10% of their net income per week. They open an account earning 7.8%p.a compunded weekly and plan to have $85000 at the end of 6 years. What is their net income per week?

You know what the future value is, but you need to work out the amount invested each week. So use the future value formula, but you're finding M now.

First remember that everything needs be in weeks:
r = 7.8% ÷ 100 ÷ 52 = 0.0015 (as a decimal)
n = 6 x 52 = 312

A = M [ (1+r)^n - 1 / r]
85000 = M [ (1+0.0015)^312 - 1 / 0.0015]
85000 = M x 397.4917232
M = 85000 ÷ 397.4917232
M = $213.84

Now remember that this is only 10% of their net income, so their total income is $2138.40.

Or, using graphic calculator:

n = 6 x 52
I = 7.8
PV = 0
PMT = ?
FV = -85000
P/Y = 52
C/Y = 52
So PMT = $213.84