An annuity is a sequence of equal payments that are paid or received at
regular time intervals. For example. you may want to deposit equal amounts at
the end of each year into an interest-bearing account for the purpose of
accumulating a lump sum at some future time. If, at the end of each year,
interest of \(i \times 100 \%\) on the account balance for that year is added to
the account, then the account is said to pay i \(\times 100 \%\) interest,
compounded annually. It can be shown that if payments of \(Q\) dollars are
deposited at the end of each year into an account that pays \(i \times 100 \%\)
compounded annually, then at the time when the \(n\) th payment and the accrued
interest for the past year are deposited, the amount \(S(n)\) in the account is
given by the formula
$$S(n)=\frac{Q}{i}\left[(1+i)^{n}-11\right.$$
Suppose that you can invest \(\$ 5000\) in an interest-bearing account at the
end of each year, and your objective is to have 5250.000 on the 25 th payment.
What annual compound interest rate must the account pay for you to achicve
your goal? IHint: Show that the interest rate \(i\) satisfies the equation \(50
i=(1+i)^{25}-1 .\) and solve it using Newton's Method.