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10. Future value of annuities Aa Aa When equal payments are made at fixed intervals for a specified number of periods, you wll treat them as an annuity You are planning to put $1,250 in the bank at the end of each year for the next eight years in hopes that you will have enough money for a new boat. If you are investing at an annual interest rate of 9%, youll have accumulated at the end of eight years. You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payments of $1,500 at an annual interest rate of 4%. How much money will you have available at the end of nine years? O $14,249 O $16,509 O $15,874 O $14,961

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solution: a) Annuity ** FVA(996,8) Formula = (((1+r)^n) -1) /r 1+0.09)A8)-1/0 02847 Annual deposit x FVA(9%,8) Future value 1,250.00 11.02847 13,786 Annual deposit1,500.00 x FVAD(496,9) Future value * * FVAD(9%,8 Formula -1+1+r)An) (1+0.04H((1+0.0449)-1/0.04 11.00611 11.00611 - 1) /r 16,509 Sheet229Sheet230Sheet231Sheet232 Sheet233 Sheet234 Sheet235 Sheet236 Sheet237 ENG 21:5 US 12/09/2018

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