Question

2. A periodic deposit is made into an annuity with the given terms. Find how much the annuity will hold at the end of the specified amount of time. Round your answer to the nearest dollar. Regular deposit: $550 Interest rate: 4.8% Frequency quarterly Time: 13 years Future value: $

Answer 1

We can find the balance at the end of the 13 years by means of the following formula:

`FV=A((1+(r)/(n))^(nt)-1)/((r)/(n))`

Where FV is the future value of the annuity by the end of t years, A is the annuity, n is the number of times interest is compounded per year (quarterly) and t is the time.

By replacing 550 for A, 4 for n, 0.048 for r (4.8%) and 13 for t into the above formula, we get:

`FV=550((1+(0.048)/(4))^(4(13))-1)/((0.048)/(4))=39392`

Then, by the end of the 13 years, the annuity will hold $39392