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6.9. Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next s

6.12 Computing annuity payment: Kevin Winthrop is saving for an Australian vacation in three years. He estimates that he will

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Answer #1

a.Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=25000[(1.114)^7-1]/0.114

=25000*9.90439783

=$247609.95(Approx)

b.Future value of annuity=Annuity[(1+rate)^time period-1]/rate

5000=Annuity[(1.103)^3-1]/0.103

5000=Annuity*3.319609

Annuity=5000/3.319609

=$1506.20(Approx)

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