Question 1127917: Determine the amount of the ordinary annuity at the end of the given period. (See Example 3. Round your final answer to two decimal places.)
$12,000 deposited annually at 9% for 12 years
Answer by ikleyn(52814)   (Show Source):
You can put this solution on YOUR website! .
It is a classic Ordinary Annuity saving plan. The general formula is
FV =  , (1)
where FV is the future value of the account; P is the annual payment (deposit); r is the annual percentage rate presented as a decimal;
n is the number of deposits (= the number of years, in this case).
Under the given conditions, P = 12000; r = 0.09; n = 12. So, according to the formula (1), you get at the end of the 12-th year
FV =  = $241,688.64.
Note that you deposit only 12*$12000 = $144,000. The rest is what the account earns/accumulates in 12 years.
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On Ordinary Annuity saving plans, see the lessons
- Ordinary Annuity saving plans and geometric progressions
- Solved problems on Ordinary Annuity saving plans
in this site.
The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.
When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.
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