3 years ago
Suppose that you earned a bachelor's degree and now you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a master's degree. To achieve this goal, you deposit $3000 at the end of each year in an annuity that pays 6.5% compounded annually.
a. How much will you have saved at the end of five years?
b. Find the interest.
a. How much will you have saved at the end of five years?
b. Find the interest.
1 Answers
Best Answer
Cmanuel1112 Staff answered 3 years ago
Cmanuel1112 Staff answered 3 years ago
As you invest in the end of the yeat you get no % at the end of it.
1st year = 3000
2nd year = 3000+3000+0.065*3000=6195 (interest 195)
3rd year=3000+6195+6195*0.065= 9,597.675 (interest 402.675)
4th year= 3000+9,597.675+9,597.675*0.065=13,221.523875 (interest 623.848875)
5th year = 3000 +13,221.523875 + 13,221.523875*0.065 =17,080.922926875 (interest 859.399051875)
Total savings = $17,080.922926875
Total Interest = 17,080.922926875 - 15,000=$2,080.922926875
1st year = 3000
2nd year = 3000+3000+0.065*3000=6195 (interest 195)
3rd year=3000+6195+6195*0.065= 9,597.675 (interest 402.675)
4th year= 3000+9,597.675+9,597.675*0.065=13,221.523875 (interest 623.848875)
5th year = 3000 +13,221.523875 + 13,221.523875*0.065 =17,080.922926875 (interest 859.399051875)
Total savings = $17,080.922926875
Total Interest = 17,080.922926875 - 15,000=$2,080.922926875