Into to Finance Question

[surftb15 10+ year member]

Maybe im a complete idiot, but does anyone know how to solve this question?

Who has more money at age 65:

1) Person A who puts $1,000 per year away from ages 21-30 and then

stops, earning 7% interest compounded annually?

2) Person B who puts $1,000 per year away from age 31-65, earning 7% interest compounded annually?

Thanks for the help in advance

Click to read more...

 

[.::DuD3::. 10+ year member]

there's a formula to find compounded interest rates.

its A=PE^rt:

a= future amount

p= initial amount

e= natural log e

r= interest rate

t= number of years

now get some paper and a calculator and figure it out //content.invisioncic.com/y282845/emoticons/thumbsupwink.gif.129404938effda6ad9cca39e7f4b58a3.gif

 

[surftb15 10+ year member]

that wouldnt work would it?

in person 1's case, he deposits over 7k in 7 years, so would the equation solve the question based on adding money form years 1-7 then stopping all together?

 

[JonMR2turbo 10+ year member]

**** we just covered this in my finance class but I forgot the equation we used. I believe the answer is 1 because it compounds longer.

 

[Flipx99 5,000+ posts]

there's a formula to find compounded interest rates.
its A=PE^rt:

a= future amount

p= initial amount

e= natural log e

r= interest rate

t= number of years

now get some paper and a calculator and figure it out //content.invisioncic.com/y282845/emoticons/thumbsupwink.gif.129404938effda6ad9cca39e7f4b58a3.gif

That is only for continuous compounding.

 

[.::DuD3::. 10+ year member]

That is only for continuous compounding.

thats true, i totally forgot about that //content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif. but he could use it figure out the amount for the 2nd part. he could also use the formula for the first part for the first 9 years, then find the remaining years with the 7% interest.

 

[Flipx99 5,000+ posts]

Maybe im a complete idiot, but does anyone know how to solve this question?
Who has more money at age 65:

1) Person A who puts $1,000 per year away from ages 21-30 and then

stops, earning 7% interest compounded annually?

2) Person B who puts $1,000 per year away from age 31-65, earning 7% interest compounded annually?

Thanks for the help in advance

Person A:

From 21 - 30 (which is 10 years)

n = 10

i/yr = 7

1000 = pmt

fv = $13, 816.44

after that compounds for 35 years = $147,512.45

pv =$13,816.44

i/yr = 7

n = 35

fv = $147,512.35

Person B:

PMT = 1000

N=35

i/yr = 7

FV = $138,236.88

Person A is teh victor

 

[surftb15 10+ year member]

whats the equation you used so i can see how you solved that?

 

[.::DuD3::. 10+ year member]

Person A:
From 21 - 30 (which is 10 years)

n = 10

i/yr = 7

1000 = pmt

fv = $13, 816.44

after that compounds for 35 years = $147,512.45

pv =$13,816.44

i/yr = 7

n = 35

fv = $147,512.35

Person B:

PMT = 1000

N=35

i/yr = 7

FV = $138,236.88

Person A is teh victor

your math > my math lol.

 

[Flipx99 5,000+ posts]

Fv = Pv (1+k)^n

I feel sorry for you if your finance teacher did not inscribe that in your forehead.

 

[surftb15 10+ year member]

no he didnt. //content.invisioncic.com/y282845/emoticons/frown.gif.a3531fa0534503350665a1e957861287.gif

half the time in class i have no idea what hes talking about.

 

[Flipx99 5,000+ posts]

your math > my math lol.

I used a calculator.

Although I knew the answer before posted. I just didn't know the numbers.

 

[ntense702 10+ year member]

flipx99 ftw

 

[Flipx99 5,000+ posts]

no he didnt. //content.invisioncic.com/y282845/emoticons/frown.gif.a3531fa0534503350665a1e957861287.gif
half the time in class i have no idea what hes talking about.

This was my major in school. My professors would shoot me if I couldn't rattle it off under any circumstances.

Now, i rarely use it.

 

[.::DuD3::. 10+ year member]

This was my major in school. My professors would shoot me if I couldn't rattle it off under any circumstances.
Now, i rarely use it.

like 99% of everything else we learn in school right?

//content.invisioncic.com/y282845/emoticons/*******.gif.a649d21efc0d1fd4890a6428166586c1.gif