Question

A. At 30 years of age, Erik sets up an IRA account where he plans to deposit $3,500 at the end of every 6 months until age 65. Find the ending value of the annuity if he invests in a bond fund that has historically yielded 6.5% compounded semiannually.

B. In 5 years, Vincent Hickman will need to replace an assembling machine for his manufacturing plant. It will require a total of $50,000. How much money will he need to deposit in an account at the end of each month if interest accrues at 8.4% compounded monthly?

C. Crystal Cota needs $30,000 in 4 years to buy a new sports car. She opens a savings account because she has bad credit and cannot take out a loan. To reach her goal in 4 years, how much must she deposit into her account at the end of each quarter if she can earn 8% interest compounded quarterly?

Please explain each question please :)

Answer #1

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