MM255 Unit 7 Project Form Joey D. Finley

MM255 Unit 7 Project Form Joey D. Finley - Unit 7:...

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Unit 7: Annuities - Project You must show your work on all problems.  You may type your answer right into this document. Total points for project:  45 points.  Projects must be submitted as a Microsoft Word document and uploaded to the Dropbox for Unit 1 All Projects are due by Tuesday at 11:59 PM ET of the assigned Unit. NOTE:  Project problems should not be posted to the Discussion threads. Questions on the project  problems should be addressed to the instructor by sending an email or by attending office hours. Part I.   Basic Computations 1. Mike’s Sport Shop deposits $3,600 at the end of each year for 12 years at 7% annual interest.  a. How much will this ordinary annuity be worth at the end of the 12 years?  (5 points)  Using the provided Chart at crossreference of 12 periods and 7% at  17.88845($3,600)= $ 64,398.42 Answer:  FV ord.annuity =PMT*[(1+R) N -1]/R  = $3,600*[(1+.07) 12 -1]/.07= $ 64,398.42 End-of-year 1 = $3,600  (no interest earned Y1) End-of-year 2 = $3,600 + $3,600(1.07) =$7,452 End-of- year 3 = $3,600 + $7,452(1.07) =$11,573.64 End-of-year 4 = $3,600 + $11,573.64(1.07) = $15,983.79 End-of-year 5 = $3,600 + $ 15,983.79(1.07) =$20,702.66 End-of-year 6 = $3,600 + $20,702.66(1.07) = $25,751.85 End-of-year 7 = $3,600 + $25,751.85(1.07) =$31,154.48 End-of-year 8 = $3,600 + $31,154.48(1.07) =$36,935.29 End-of-year 9 = $3,600 + $36,935.29(1.07) =$43,120.76 End-of-year 10 = $3,600 + $43,120.76(1.07) = $49,739.21 End-of-year 11 = $3,600 + $49,739.21(1.07) =$56,820.96 End-of-year 12 = $3,600 + $56,820.96(1.07) =  $64,398.42   b. How much more will this annuity be worth (annuity due) if Mike deposits the money at the 
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MM255 Unit 7 Project Form Joey D. Finley - Unit 7:...

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