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Comparing Annuities

1. Use the TVM (Time Value of Money) application to calculate how much money you have for each of the 5 scenarios.

a) You invest $5000, add $0 each month, at 7.9% for 11 years.

b) You invest $5000, add $25 each month, at 7.9% for 11 years.

c) You invest $2500, add $50 each month, at 7.9% for 11 years.

d) You invest $2500, add $75 each month, at 7.9% for 11 years.

e) You have no initial investment but open an account and add $125 each month, at 7.9% for 11 years.

Answer :

According to question We get FV = $12,797.78.

a) Using the TVM application with the following values:

PV = -5000

PMT = 0

i = 7.9/12

n = 11*12

b) Using the TVM application with the following values:

PV = -5000

PMT = -25

i = 7.9/12

n = 11*12

We get FV = $16,538.09

c) Using the TVM application with the following values:

PV = -2500

PMT = -50

i = 7.9/12

n = 11*12

We get FV = $12,874.58

d) Using the TVM application with the following values:

PV = -2500

PMT = -75

i = 7.9/12

n = 11*12

We get FV = $14,786.98

e) Using the TVM application with the following values:

PV = 0

PMT = -125

i = 7.9/12

n = 11*12

We get FV = $14,664.60

what is TVM?

TVM stands for Time Value of Money. It is a financial concept that refers to the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. TVM is used in various financial calculations such as loans, investments, and annuities to determine the value of money over time, taking into account factors such as interest rates, inflation, and compounding. TVM is an important tool for financial planning and decision making.

To learn more about TVM visit:

brainly.com/question/31380240

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