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Numerical Analysis The accumulated value of savings account based on regular periodic payments can be...

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Finance

Numerical Analysis

The accumulated value of savings account based on regular periodic payments can be determined from the annuity due equation

=( \ ) [(1 + ) 1]

In this equation, A is the amount in the account. P is the amount regularly deposited, i is the rate of interest per period for the n deposit periods. An engineer would like to have a saving account valued at 480 $ upon retirement in 20 years and can afford to put 1200 $ per mount towards this goal.

a) What is the minimal interest rate at which this amount can be invested, assuming that the interest is compounded monthly?

b) The approximate solution to this equation can be found by any method. Since the derivative of the function is complicated, determine which method will be better choice and explain why-by mentioning the minimal annual interest percentage that you obtain in part (a)

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