For you Math guys...

[Raven 10+ year member]

5000 * 1.12 ^ 46 = $918330.58
Start with 5000.

Every year, you add 12%, or the number is 120% of the previous year.

Add 12% to the previous year for 46 years means...

$5000 * 1.12 * 1.12 * 1.12 * 1.12 ... * 1.12

or

$5000 * 1.12 ^ 46

$X = 5000;
$y = 1.12;
for($i=0;$i<46;++$i){
  $X=$X*$y;
  }
$X=$X-($X*0.3);
return $X;

Inefficient, but effective.

 

[Flipx99 5,000+ posts]

haha finance major... ****, I think I should be believing this answer...
but why does everyone here have different answers haha.. This is only 1st year college... come on people. Actually, I remember doing this stuff in High school too... and still can't figure it out haha.

because they are using the wrong formula.

The correct formula is : p(1+k)^n

where p = principle 5000

k = rate

n = number of times compounding

it is showing yuo the magic of compound interest.

 

[dleccord 5,000+ posts]

lol so basically this is algebra math? im doing it right now in school too, just stick to the formulas and youre good to go

 

[Flipx99 5,000+ posts]

Thats what I got.F = P{(1 + r/n))^(nt)} x .7

where F = future value of the investment after t years

where P = present value of the investment (initial principal invested)

where r = annual compound interest rate (expressed as a decimal number)

where n = number of compounding periods per year, and

where t = time (expressed in years)

n should be one in your case because of annual compounding

 

[Flipx99 5,000+ posts]

Try again here if you think I not know what I am talking about : http://www.investopedia.com/calculator/FVCal.aspx

 

[Hundreth 10+ year member]

I don't know what class this is for, but I learned how to solve problems like that in one of my Computer Science classes, its called a linear homogeneous recurrence of degree k with constant coefficients...

Let Pn denote the amount in the RRSP after n years..

We can derive the following recurrence relation:

Pn = Pn-1 + .12Pn-1 = 1.12Pn-1

The initial condition is P = 5000

Then we have:

Pn = 1.12Pn-1 = (1.12)^nP0

We now have a formula to calculate Pn for any natural number n and can avoid the iteration.

So... P46 = (1.12)^46 * 5000 = 918330

Take 30% of that and you have 275499, subtract it from the above solution and you end up with... $642,831.00

Hope I'm right and hope that helped. //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

 

[sumone 10+ year member]

Inefficient, but effective.

Good shit.

How bout...

return 0.7 * (5000 * pow(1.12, 46))

 

[Beat_Dominator 5,000+ posts]

I think my answer is the only right one so far lol.

 

[DIPayton 10+ year member]

1 last thing, someone in my class said my formula on paper should look something like this by how we were taught it: y=5000 (.12)^46 before subtracting the 30%. That formula isn't working for me or something tho... Is that right? I know before subtracting the 30% it should come out in a y=a(b)^x formula.

btw, I got more questions that are stumping me. I can post them if you want haha Thanks a lot for the help guys.

 

[Flipx99 5,000+ posts]

lol so basically this is algebra math? im doing it right now in school too, just stick to the formulas and youre good to go

It gets quite a bit more complicated. It is terribly difficult to get EXACTLY 12% per year for 46 years. Sometimes it would be stupid. In the early 80s, inflation was over 12% (or quite close) and you would actually be losing money. It gets more fun when the rates change over time.

 

[sumone 10+ year member]

You started correct but ended incorrectly, unless I misunderstood the question. Most of the time you don't assume that you pay taxes each year, but perhaps in this problem you might. But you would only be taxed on the interest.

I misread the question & thought it was seeking the amount of the resultant tax.

 

[Flipx99 5,000+ posts]

1 last thing, someone in my class said my formula on paper should look something like this by how we were taught it: y=5000 (.12)^46 before subtracting the 30%. That formula isn't working for me or something tho... Is that right? I know before subtracting the 30% it should come out in a y=a(b)^x formula.

btw, I got more questions that are stumping me. I can post them if you want haha Thanks a lot for the help guys.

It should be 1.12 not .12

 

[JAZN 5,000+ posts]

1 last thing, someone in my class said my formula on paper should look something like this by how we were taught it: y=5000 (.12)^46 before subtracting the 30%. That formula isn't working for me or something tho... Is that right? I know before subtracting the 30% it should come out in a y=a(b)^x formula.

btw, I got more questions that are stumping me. I can post them if you want haha Thanks a lot for the help guys.

Should be y = 5000(1+.12)^46

 

[sumone 10+ year member]

1 last thing, someone in my class said my formula on paper should look something like this by how we were taught it: y=5000 (.12)^46 before subtracting the 30%. That formula isn't working for me or something tho... Is that right? I know before subtracting the 30% it should come out in a y=a(b)^x formula.

btw, I got more questions that are stumping me. I can post them if you want haha Thanks a lot for the help guys.

It's because 5000(.12) is like saying they take away 88 percent every year...

You want 5000(1.12) meaning they add 12 percent every year.

 

[Flipx99 5,000+ posts]

ha ha, first time I was sucessful answering a question on caraudio.com!