You are to make monthly deposits of $300 into a retirement account that pays 11% interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 20 years?
On the BAII:
P/Y=C/Y=12
Make sure mode set to END
CLR TVM
240 N 11 I PMT 300 CPT FV (I don’t have my calculator on me, but FV should be 259,691.49)
Who cares?
I want to know where you find a retirement account that pays 11% interest!
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After 1 month, you owe the bank 6,000 * (1+0.019/12) = 6,009.50. Now you don’t have to do this calc 12 times: you can treat it as 2 different accumulation periods.
@S2000magician : I bet this Shady Bank outfit offers that 11% retirement savings account!!!
Have you tried to do it?
I’d be more inclined to believe that if the question mentioned that for every monthly payment missed there was a $100 fee charged, which is added to the balance and immediately accrues interest.
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I got the answer using
N=6
I/y= 1.9%/6
PV=6000
PMT= 0
FV= 6057.23
After which i use it until i get the interest 558.23.
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So far, so good.
You omitted a couple of steps here, but your answer’s correct.