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# 6.2 Notes - If the account is assumed to pay 6 compounded...

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Page 279 Example: Find the future value of an annuity if \$300 is deposited at the end of every month for two years at 4.5% annual interest.

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Page 281 Formula for the Future (Accumulated) Value of an Ordinary Annuity with a Starting Balance m r 1 m r 1 p m r 1 P A t m t m = i 1 i 1 p i 1 P n n A is the future (accumulated) value of the annuity after t years P is the initial amount in the account. p is the payment made at the end of each compounding period r is the annual compound interest rate, compounded m times per year, in decimal form m is the number of compounding periods (payments) per year t is the number of years m r i = interest rate per period t m n = total number of interest periods (payments) P. 283, #14 Timothy has \$10,000 in an account now and plans to add \$1000 to the account at the end of each quarter from now on.

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Unformatted text preview: If the account is assumed to pay 6% compounded quarterly, how much will be in it at the end of eight years? Page 280 P. 284, #22 If you are 30 years of age now and if you plan to retire at age 60 with an IRA account having a total accumulated value of \$300,000, how much would you have to invest at the end of each year if the account paid 6% compounded annually? Page 282 P. 284, #24 The Brewsters are saving for their daughter's college days. They would like to be able to withdraw \$800 each month from their account for five years once their daughter starts college. Assuming that their account will earn interest at the rate of 9% compounded monthly, what sum of money should the Brewsters have in the account when their daughter starts college?...
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