SOLUTION: What is the future value of an annuity due of $5645 paid every six months for three years at a 6% annual interest compounded semiannually

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Question 1138853: What is the future value of an annuity due of $5645 paid every six months for three years at a 6% annual interest compounded semiannually
Answer by ikleyn(52834) About Me  (Show Source):
You can put this solution on YOUR website!
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It is a classic Annuity due saving plan. The general formula is 


    FV = P%2A%281%2Br%29%2A%28%28%281%2Br%29%5En-1%29%2Fr%29,    (1)


where  FV is the future value of the account;  P is your annual payment (deposit); 
r is the annual percentage rate presented as a decimal; 
n is the number of deposits (= the number of years multiplied by 2, in this case).


Under the given conditions, P = 5645;  r = 0.06/2;  n = 3*2 = 6.  So, according to the formula (1), 
you get at the end of the 6-th year


    FV = 5645%2A%281%2B0.06%2F2%29%2A%28%28%281%2B0.06%2F2%29%5E6-1%29%2F%280.06%2F2%29%29 = $37609.60.   ANSWER

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On Ordinary Annuity and Annuity due saving plans,  see the lessons
    - Ordinary Annuity saving plans and geometric progressions
    - Solved problems on Ordinary Annuity saving plans
    - Annuity Due saving plans and geometric progressions
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.