Explanation Given: The first annuity at the end of each month is $500, the first term of annuity is 20 years, interest earned is 5%. Next annuity at the end of each month is $1000, the next term of annuity is 20 years, interest earned is 8%. Formula Used: The amount earned can be calculated by using the formula S = R [ ( 1 + i ) n − 1 i ] S is the future value or total amount earned on annuity, R is the payment at the end of each year, i is the interest rate per year, n is the number of years. Calculation: Case 1: Calculate the first future value ( S 1 ) on first 20 years payments, by using above formula. Here, interest earned on the amount is monthly. So, divide interest by 12 and multiply the number of years by 12. R = $ 500 , i = .05 12 n = 12 × 20 = 240 S 1 = R [ ( 1 + i ) n − 1 i ] = $ 500 [ ( 1 + .05 12 ) 240 − 1 .05 12 ] = $ 500 [ ( 1 + .00417 ) 240 − 1 .004166666 ] = $ 500 [ 2.712640285 − 1 .004166666 ] Simplifying it further, S 2 = $ 500 [ 1.7126402854 0.004166666 ] = $ 500 × 411.03373426139 = $ 205 , 516.8 Case 2: Now, future value ( S 2 ) for next 20 years: Here, interest earned on the amount is monthly. So, divide interest by 12 and multiply the number of years by 12. R = $ 1000 , i = .08 12 n = 12 × 20 = 240 S 2 = R [ ( 1 + i ) n − 1 i ] = $ 1000 [ ( 1 +

Mathematics with Applications In the Management, Natural, and Social Sciences (12th Edition)

12th Edition

ISBN: 9780134767628

Author: Margaret L. Lial, Thomas W. Hungerford, John P. Holcomb, Bernadette Mullins

Publisher: PEARSON

See similar textbooks

Concept explainers

Unitary Method

The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.

Speed, Time, and Distance

Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 …

Profit and Loss

The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.

Units and Measurements

Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experime…

Videos

Question

Chapter 5.3, Problem 10E

To determine

To calculate: The total amount earned in the account.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 5.3, Problem 9E

Chapter 5.3, Problem 11E

Students have asked these similar questions

Please could you provide a step by step solutions to this question and explain every step.

Could you please help me with question 2bii. If possible could you explain how you found the bounds of the integral by using a graph of the region of integration. Thanks

Let A be a vector space with basis 1, a, b. Which (if any) of the following rules turn A into an algebra? (You may assume that 1 is a unit.) (i) a² = a, b² = ab = ba = 0. (ii) a²=b, b² = ab = ba = 0. (iii) a²=b, b² = b, ab = ba = 0.

Chapter 5 Solutions

Mathematics with Applications In the Management, Natural, and Social Sciences (12th Edition)

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, subject and related others by exploring similar questions and additional content below.