r is the annual interest rate.
A is the amount after n years.
If $5,000 is invested each year in an annuity earning
8% annual interest,
when will the account be worth $500,000?
| *Annuities: |
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P is amount invested each year. r is the annual interest rate. A is the amount after n years. |
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Solve |
Step |
|
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annuity formula |
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Identify
each part
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P = 5,000
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invested each year |
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r = 0.08
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annual interest rate |
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A =
500,000
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amount after n years |
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plug in the parts |
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and simplify |
| Interpret Þ It will take about 29 years to have 500,000 by investing 5,000 a year at 8% annual interest. | |
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Calculator Help |
| Find your log key. (common log) |
| HINT: use these key strokes |
| log(500000×.08÷5000 + 1)÷log(1 + .08) [enter or =] |
| parentheses are need here |
