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Q: Financial Markets - Financial Mathematics ( Answered 4 out of 5 stars,   0 Comments )
Question  
Subject: Financial Markets - Financial Mathematics
Category: Miscellaneous
Asked by: traceyc-ga
List Price: $5.00
Posted: 24 Aug 2004 19:05 PDT
Expires: 23 Sep 2004 19:05 PDT
Question ID: 392162
If I invest $5,000 now and expect to be able to invest $300.00 at the
end of every month for 12 months (12 deposits) starting at the end of
the current month.  How much will I have invested by the end of the
year if my investements earn an effective annual rate of 8% compounded
monthly?
Answer  
Subject: Re: Financial Markets - Financial Mathematics
Answered By: omnivorous-ga on 24 Aug 2004 21:13 PDT
Rated:4 out of 5 stars
 
Traceyc --

An effective annual interest rate of 8% compounded monthly is 0.75% or
0.0075 times the principal, calculated each month.  The chart below
has the principal, monthly contribution and interest paid each month. 
To get month 3's total (or principal), we add:

Month 2 principal + Month 3 contribution + Month 3 interest



Month .	Principal . . .	Monthly . .Interest

0 . . .	$5,000.00		
1 . . .	$5,337.50 . . .	$300.00 . $37.50
2 . . .	$5,677.53 . . .	$300.00	. $40.03
3 . . .	$6,020.11 . . .	$300.00	. $42.58
4 . . .	$6,365.26 . . .	$300.00	. $45.15
5 . . .	$6,713.00 . . .	$300.00	. $47.74
6 . . .	$7,063.35 . . .	$300.00	. $50.35
7 . . .	$7,416.33 . . .	$300.00	. $52.98
8 . . .	$7,771.95 . . .	$300.00	. $55.62
9 . . .	$8,130.24 . . .	$300.00	. $58.29
10 . . .$8,491.21 . . .	$300.00	. $60.98
11 . . .$8,854.90 . . .	$300.00	. $63.68
12 . . .$9,221.31 . . .	$300.00	. $66.41

TOTAL =	$9,221.31

If any aspect of these calculations is unclear, please let us know via
a Clarification Request before rating this answer.

Best regards,

Omnivorous-GA
traceyc-ga rated this answer:4 out of 5 stars

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