document.write( "Question 1137936: You would like to have $6,000.00 in 7 years for a special vacation following graduation by making deposits at the end of each year in an annuity that pays 4% compounded annually.\r
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\n" ); document.write( "\n" ); document.write( "How much money should you deposit at the end of every year? \r
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\n" ); document.write( "\n" ); document.write( "How much of the $6,000.00 comes from deposits and how much comes from interest? \n" ); document.write( "

Algebra.Com's Answer #755796 by ikleyn(52788) $\"\"$ $\"About$

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document.write( "It is a classic Ordinary Annuity saving plan. The general formula is \r\n" );
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document.write( "    FV = ,   \r\n" );
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document.write( "where  FV is the future value of the account;  P is annual payment (deposit); r is the annual percentage yield presented as a decimal; \r\n" );
document.write( "n is the number of deposits (= the number of years, in this case).\r\n" );
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document.write( "From this formula, you get for for the annual payment \r\n" );
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document.write( "    P = .     (1)\r\n" );
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document.write( "Under the given conditions, FV = $6,000;  r = 0.04;  n = 7.  So, according to the formula (1), you get for the annual payment \r\n" );
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document.write( "    P =  = $759.66.\r\n" );
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document.write( "Answer.  The necessary annual deposit value is $759.66.\r\n" );
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document.write( "Of the $6000, only 7*759.66 = 5317.62 dollars comes from deposit.\r\n" );
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document.write( "The rest 6000.00 - 5317.62 = 682.38 dollars comes from interest.\r\n" );
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\n" ); document.write( "\n" ); document.write( "On Ordinary Annuity saving plans, see the lessons\r
\n" ); document.write( "\n" ); document.write( " - Ordinary Annuity saving plans and geometric progressions\r
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\n" ); document.write( "\n" ); document.write( "The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.\r
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\n" ); document.write( "\n" ); document.write( "When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.\r
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