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where
A = accumulated savings plan balance
P M T = regular payment (deposit) amount
AP R = annual percentage rate (as a decimal)
n = number of payment periods per year
Y = number of years
Ex.1
Suppose you deposit $100 into your savings plan at the end of each month. Further, suppose that your
plan pays interest monthly at an annual rate of AP R = 12%, or 1% per month. What is your balance at
the end of 3 months?
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C
Let’s assume you will try to accumulate this balance of A = $556, 000 by making regular, monthly deposits
into a saving plan.
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C
Ex.5
Consider a case in which you invest a starting principal of $1, 000 and it grows to $1, 500 in 5 years.
Although the interest rate may have varied during the 5 years, we can still describe the change in both
total and annual terms:
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C
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Chapter 4: Managing Your Money Lecture notes Math 1030 Section C