Question

1. Complete each table. What is the amount of each annuity [2 x 4 marks] a) $1000 deposited at the end of each year at 8% per year compounded annually. Year Interest Earned Deposit Starting Balance $0.00 $ 1 000.00 $0.00 $80.00 Ending Balance $ 1 000.00 $2800.00 $ 1 000.00 $1 000.00 $ 1 000.00 $1 000.00 b) $100 deposited at the end of each month at 6% per year compounded monthly Month Interest earned Deposit Starting Balance $0.00 $100.00 Ending Balance $100.00 $200.50 $0.00 $0.50 $100.00 $100.00 $100.00 $100.00

Answer 1

Question a: Starting Interest Year Balance earned A B C =B*8% 1 $ - $ - 2 $1,000.00 $ 80.00 3 $2,080.00 $ 166.40 4 $3,246.40 $ 259.71 Amount of Annuity is $4,506.11 Deposit D E $1,000 $1,000 $1,000 $1,000 Ending balance =B+C+D $1,000.00 $2,080.00 $3,246.40 $4,506.11 Question b: Starting Interest Year Balance earned A C=B*6%/12 i $ - $ - 2 $ 100.00 $ 0.50 3 $ 200.50 $ 1.00 4 $ 301.50 $ 1.51 Amount of Annuity is $403.01 Deposit D E $100 $100 $100 $100 Ending balance =B+C+D $ 100.00 $ 200.50 $ 301.50 $ 403.01