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Annuities and compounding Personal Finance Problem: Janet Boyle intends to deposit ​$340 per year in a...

Annuities and compounding Personal Finance Problem: Janet Boyle intends to deposit ​$340 per year in a credit union for the next 9 ​years, and the credit union pays an annual interest rate of 10​%.

a. Determine the future value that Janet will have in ​years, given that​ end-of-period deposits are made and no interest is​ withdrawn, if

​​(1) ​$170 is deposited semiannually and the credit union pays interest semiannually.

​(2) ​$85 is deposited quarterly and the credit union pays interest quarterly.

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Answer #1

FV = 4617.02

FV = PMT ((1+i)n - 1 / i

FV =340 x ((1+0.1)9 - 1 / 0.1

FV = 340x (1.3579 / 0.1)

FV = 340 x 13.5795

FV = 4617.02

(1)FV =4782.51

$170 is deposited semiannually and the credit union pays interest semiannually.

FV = PMT ((1+i)n - 1 / i

FV =170 x ((1+0.05)18 - 1 / 0.05

FV = 170 x (1.4066/0.05)

FV =170 x 28.1324

FV =4782.51

(2)FV =4870.62

​$85 is deposited quarterly and the credit union pays interest quarterly.

FV = PMT ((1+i)n - 1 / i

FV =85 x ((1+0.025)36 - 1 / 0.025

FV = 85 x (1.4325 / 0.025)

FV = 85 x 57.3014

FV =4870.62

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