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Since
the calculated value of N is between 5 and
6,
it will
take
6 years
of
annual compounding
to
achieve
a balance
of
at
least $3,000.
fn.
actual balance
at the end
of
six years can be
calculated:
6
ffi
H=6,88
ffi
FV=J,B3E,eg
Stores
N for
six
years.
Calculates balance
after
six
years.
Erample: An lndividual Retirement Account.
You opened an in-
dividual retirement account on
April
L5, 1985
with a
deposit of
$2,000. Thereafte{,
you deposit
$80.00
into the
account
semimonthly
at the end of
each
half-month. The
account
pays
8.3o/o
annual inter-
est, compounded semimonthly.
How much
will
the
account contain
on
April
15th,
2000?
l"/"YR:8.3
P/YR:2x12i
End
mode
N-
15
x
12x2
359
360
PV:
-
2,000
5
(tl
(o
@
(tl
5
(tl
t\)
o o
o
6: Time
Value
of toney
t29
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