How do I solve for the rate of return in a future value of annuity formula? - solving an annuity for r
In the future value of an annuity formula:
PV * [(1 + r) ^ n - 1] / r = fv
How can I solve for r to? Thank you.
Solving An Annuity For R How Do I Solve For The Rate Of Return In A Future Value Of Annuity Formula?
2 comments:
Formula:
= SUM ([1 + r] ^ n)
Answer: SUM ([1 + r] ^ n)
Applying the above formula, taking deposit $ 1,000 per year for 3 years at 10% per year compounded:
= $ 1,000 (1.1 + [1.1 * 1.1] + [1.1 * 1.1 * 1.1])
= $ 1,000 (1.1 + 1.21 + 1.331)
= $ 1,000 (3,641)
= $ 3641
Scales (per year) with a 10% participation:
1. Year:
= 1,000 + $ 0.1 ($ 1,000)
= $ 1,000 + $ 100
= $ 1100
2. Year:
= $ 1,100 + $ 1,000 + 0.1 ($ 1100 + $ 1000)
= $ 2.100 + 0.1 ($ 2,100)
= $ 2,100 + $ 210
= $ 2310
3. Year:
= $ 2,310 + 1,000 + $ 0.1 ($ 2,310 + $ 1,000)
= 3310 + $ 0.1 ($ 3310)
= $ 3,310 + $ 331
= $ 3641
completed, the corresponding number of N, P, F, G and solve an equation as usual.
Post a Comment