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Unformatted text preview: account earning 8.5% compounded annually? How much of this value is interest? 3. Suppose the parents of a newborn child decide that on each of the child’s birthdays up to the 17 th year, they will make an annual deposit in an account that pays 6% compounded annually. The money is to be used for college expenses. What should the annual deposit be in order for the amount in the account to be $80,000 after the 17 th deposit? 4. Suppose you want to buy an $80,000 car in 5 years. (a) How much should you invest now to have $80,000 toward the purchase of a car in 5 years if the interest is 10% compounded monthly? (b) How much should the monthly deposit be to have $80,000 available in 5 years if the interest is 10% compounded monthly?...
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 '10
 Arabhi,Sundararajan
 Annuity

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