Find the amount (future value) of the ordinary annuity. (Round your answer to th

Question

Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.) $1400/semiannual period for 9 years at 3.5%/year compounded semiannually Find the present value of the ordinary annuity. (Round your answer to the nearest cent.) If Jackson deposits $50 at the end of each month in a savings account earning interest at a rate of 2%/year compounded monthly, how much will he have on deposit in his savings account at the end of 2 years, assuming he makes no withdrawals during that period? (Round your answer to the nearest cent.) The Pirerras are planning to go to Europe 2 years from now and have agreed to set aside $170/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 2%/year compounded monthly, how much money will be in their travel fund at the end of the second year? (Round your answer to the nearest cent.) $ Luis has $180,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $2000/quarter into the new account until his retirement 20 years from now. If the new account earns interest at the rate of 3.5%/year compounded quarterly, how much will Luis have in his account at the time of his retirement? (Round your answer to the nearest cent.) $

Explanation / Answer

Solution: (1)

FVoa = PMT [(((1 + i)^n) - 1) / i]
Where:
FVoa = Future Value of an Ordinary Annuity
PMT = Amount of each payment = $1400/semiannual
i = Interest Rate Per Period = 1.75%
n = Number of Periods = 18 periods

FVoa = 1400 [(((1 + 1.75%)^18) - 1) / 1.75%]

        = 29322.49

Solution:(2)

Present Value:

PV = Pmt x (1 - 1 / (1 + i)^n) / i

PV = 1400 x (1 - 1 / (1 + 1.5%)^14) / 1.5% = 17,560.73

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