(a) To determine The amount of an annuity if Sarah deposited $ 12000 at the end of each year for 9 years in the local bank with 5 % interest rate compounded annually. Explanation Given: The value of R is $ 12000 deposited at the end of each year for 9 years with 5 % interest rate compounded annually. Concept: “The expression for Amount of Annuity is given below. The amount S of an annuity of payments of R dollars each, made at the end of each period for n consecutive interest periods at a rate of interest i per period is given by S = R [ ( 1 + i ) n − 1 i ] .” Calculation: It is given that the value of R is $ 12000 and n = 9 . Now, the value of i if the payments are made at the end of each year is i = 5 % 1 . It is simplified as follows: i = 5 100 = 0.05 Therefore, the interest compounded annually is i = 0.05 . Substitute 12000 for R , 0 (b) To determine The amount of an annuity if Sarah deposited $ 12000 at her brother-in-law bank that pays 3 % interest rate compounded annually at the end of each year for 9 years . (c) To determine The amount of an annuity Sarah lose over 9 years by using her brother-in-law’s bank instead of her local bank.

Calculus with Applications (11th Edition)

11th Edition

ISBN: 9780321979421

Author: Margaret L. Lial, Raymond N. Greenwell, Nathan P. Ritchey

Publisher: PEARSON

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Chapter 12.2, Problem 31E

(a)

To determine

The amount of an annuity if Sarah deposited $12000 at the end of each year for 9 years in the local bank with 5% interest rate compounded annually.

(b)

To determine

The amount of an annuity if Sarah deposited $12000 at her brother-in-law bank that pays 3% interest rate compounded annually at the end of each year for 9 years.

(c)

To determine

The amount of an annuity Sarah lose over 9 years by using her brother-in-law’s bank instead of her local bank.

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Chapter 12.2, Problem 30E

Chapter 12.2, Problem 32E

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