Question

 Jack and Jill are saving for a rainy day and decide to put ​$50 away in their local bank every year for the next 25 years. the local Up-the-Hill Bank will pay them 7 % on their account. a. if jack and Jill put the money in the account faithfully at the end of every​ year, how much will they have in it at the end of 25 years? b.Unfortunately, Jack had an accident in which he sustained head injuries after only 10 years of savings. the medical bill has come to $700. Is there enough in the​ rainy-day fund to cover​ it? a. If Jack and Jill put the money in the account faithfully at the end of every​ year, how much will they have in it at the end of 25 years? $ blank (Round to the nearest cent).

Answer 1

Future value of annuity = Annual Amount*[{(1+r)^n - 1}/r]

Hence, amount after 25 years = 50*[{(1.07)^25 - 1}/0.07]

= $3,162.45

b.Amount after 10 years = 50*[{(1.07)^10 - 1}/0.07]
= $690.82

Bill = $700

The amount is not enough