Question

# 3c3. You need to accumulate \$75,706 for your son's education. You have decided to place equal...

3c3.

You need to accumulate \$75,706 for your son's education. You have decided to place equal year-end deposits in a savings account for the next 5 years. The savings account pays 14.25 percent per year, compounded annually. How much will each annual payment be?

Round the answer to two decimal places.

3b3.

You plan to buy a house in 13 years. You want to save money for a down payment on the new house. You are able to place \$323 every month at the end of the month into a savings account at an annual rate of 11.18 percent, compounded monthly. How much money will be in the account after you made the last payment?

Round the answer to two decimal places.

3c3.Information provided:

Future value= \$75,706

Time= 5 years

Monthly interest rate= 14.25%

The annual payment is calculated by entering the below in a financial calculator:

FV= 75,706

N= 30

I/Y= 14.25

Press the CPT key and PMT to compute the annual payment.

The value obtained is 11,396.45.

Therefore, the annual payment is \$11,396.45.

3b3.Information provided:

Monthly deposit= \$323

Time= 13 years*12= 156 months

Monthly interest rate= 11.18%/12= 0.9317%

The question is solved by calculating the future value.

Enter the below in a financial calculator to compute the future value :

PMT= -323

N= 156

I/Y= 0.9317

Press the CPT key and FV to compute the future value.

The value obtained is 112,637.93.

Therefore, \$112,637.93 will be in the account after I made the last payment.