Answer to Question #233299 in Financial Math for Tola

Question

Samuel wants to make regular annual payments of size P dollars into an annuity that pays


interest of an annual rate of 0.25 or 25%. He wants to have 1.5 times the invested amount


in the account after 5 years.


A) Determine the size, P of the required annual payment.


B) Create a table and do a step by step calculation to verify your answer in part A

Answer 1

Given :

Samuel wants to make regular annual payments of size P dollars into an annuity that pays

the interest of an annual rate of 0.25 or 25%.

He wants to have 1.5 times the invested amount in the account after 5 years.

A) Computation showing the size of annual payment :

Excel working:

B). Table showing calculation:

Excel Working: