(a) Explanation Given: April Peel deposits $12,000 at the end of each year for 9 years. The account pays 8% interest compounded annually. Explanation: Use the formula for the future value of an ordinary annuity S = R [ ( 1 + i ) n − 1 i ] Here, S is the future value, R is the periodic payment, i is the interest rate per period, and n is the number of periods. Substitute R = 12 , 000 , i = 0.08 , and n = 9 ;the future value of the given annuity will be S = R [ ( 1 + i ) n − 1 i ] = 12 , 000 [ ( 1 + 0 (b) To determine The future value of the ordinary annuity paying 6% interest compounded annually for 9 years with R = 12 , 000 (c) To determine Difference of two final amounts obtained in part (a) and part (b)

11th Edition

ISBN: 9780321979438

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

Publisher: PEARSON

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Chapter 5.2, Problem 47E

(a)

To determine

The future value of the ordinary annuity paying 8% interest compounded annually for 9 years with R=12,000

(b)

To determine

The future value of the ordinary annuity paying 6% interest compounded annually for 9 years with R=12,000

(c)

To determine

Difference of two final amounts obtained in part (a) and part (b)

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Chapter 5.2, Problem 46E

Chapter 5.2, Problem 48E

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Chapter 5 Solutions

Finite Mathematics (11th Edition)

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The future value of the ordinary annuity paying 8% interest compounded annually for 9 years with R = 12 , 000

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The future value of the ordinary annuity paying 8% interest compounded annually for 9 years with R=12,000

The future value of the ordinary annuity paying 6% interest compounded annually for 9 years with R=12,000

Difference of two final amounts obtained in part (a) and part (b)

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Chapter 5 Solutions