Time Value of Money
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1. What interest rate would allow you to accumulate $10,000 in 8 years if you saved $60 per month and earned compounded interest monthly?
2. What amount of money should you pay each month to retire a $12,000 debt in five years if the interest rate on money owed is 10%?
3. If the equivalent annual interest rate is 15% what is the monthly rate that would be compounded to achieve this?
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Answers to questions on Time Value of Money dealing with Interest Rate, Amount paid to retire debt, monthly interest rate
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1. What interest rate would allow you to accumulate $10,000 in 8 years if you saved $60 per month and earned compounded interest monthly?
no of years= 8
no of months= 96 =12x8
Monthly amount = $60
Total amount= $10,000
FVIFA (Future Value Interest Factor for an annuity) x Monthly amount ($60)= $10,000
Therefore FVIFA= 166.67 =10000/60
From the tables
for n= 96 and ...
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