Question

Use Table 12-1 to calculate the future value of the following annuity due. Round your answer to the nearest cent.

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Annuity Payment	Payment Frequency	Time Period (years)	Nominal Rate (%)	Interest Compounded	Future Value of the Annuity
	every month			monthly	$

Solve the following by using Table 12-1.

Suntech Distributors, Inc., deposits $6,000 at the beginning of each 3-month period for 6 years in an account paying 6% interest compounded quarterly. Round your answers to the nearest cent.

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a. How much will be in the account at the end of the 6-year period?

$

b. What is the total amount of interest earned in this account?

$

Solve the following by using Table 12-1.

Jorge Otero has set up an annuity due with the United Credit Union. At the beginning of each month $180 is electronically debited from his checking account and placed into a savings account earning 6% interest compounded monthly. What is the value of Jorge's account after 12 months? Round your answer to the nearest cent.

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$

Solve the following by using formulas. Do not round intermediate calculations. Round your answer to the nearest cent.

Ordinary Annuity

Annuity Payment	Payment Frequency	Time Period (years)	Nominal Rate (%)	Interest Compounded	Future Value of the Annuity
$2000	every 3 months	10 1/2	18	quarterly	$

Answer 1

The future value of annuity is calculated using the following equation:-

FV annuity due = A[ (1 + r)" - 1] 2x (1+r)

$6000[(1 +0,06)*** - 11 0.06 FV annuity due =

Future value of annuity = $ 174,378.14 $\approx$ $ 174,378.00

Amount in the account at the end of 6 year period = $ 174,378.00

Amount of interest earned in this account = $ 174,378.00 - $ 6000 × 24

Amount of interest earned in this account = $ 30,378.00

Annuity payment	Payment frequency	Time period ( years)	Nominal rate(%)	Interest compounded	Future value of the annuity
$6,000	Every 3 months	6	6%	Quarterly	$174,378.00

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$180[(1+ 906) *** - 1].. *12 -x(1+0.06 FV annuity due =

Future value of annuity = $ 2,231.50 $\approx$ $ 2232.00

The value of Jorge's account after 12 months = $ 2,232.00

Annuity payment	Payment frequency	Time period ( years)	Nominal rate(%)	Interest compounded	Future value of the annuity
$180	Every month	1	6%	Monthly	$2,232.00