Question

1. Find the payment that should be used for the annuity due whose future value is given. Assume that the compounding period is the same as the payment period.

$15,000; quarterly payments for 12 years; interest rate 6.3%

The payment should be $____(round to the nearest cent)

2. In order to accumulate enough money for a down payment on a house, a couple deposits $273 per month into an account paying 3% compounded monthly. If payments are made at the end of each period, how much money will be in the account in 3 years?

What is the amount in the account after 3 years?

$____

Answer 1

1.

Calculating Quarterly Payment,

Using TVM calculation,

PMT = BEG[PV = 15,000, FV = 0, N = 48, I = 0.063/4]

PMT = $440.77

2.

Calculating Future Value,

Using TVM Calculation,

FV = [PV = 0 , PMT = 273, N = 36, I = 0.03/12]

FV = $10,270.41