SOLUTION: you expect to receive $1,000 at the end of each of the next 3 years. you will deposit these payments into an account which pays 10 percent compounded semiannually. what is the futu

Algebra ->  Finance -> SOLUTION: you expect to receive $1,000 at the end of each of the next 3 years. you will deposit these payments into an account which pays 10 percent compounded semiannually. what is the futu      Log On


   

Question 1177850: you expect to receive $1,000 at the end of each of the next 3 years. you will deposit these payments into an account which pays 10 percent compounded semiannually. what is the future value of these payments, that is, the value at the end of the third year?
Found 2 solutions by MathLover1, ikleyn:
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!

The Future Value of annuity can be represented as:
FV=P%28%281%2Br%29%5En-1%29%2Fr
P%28Payment%29+=+1000
r%28rate%29+=+10.00% or 0.10
n%28Periods%29+=+3+
FV=1000%28%281%2B0.10%29%5E3-1%29%2F0.10
FV=1000%283.31%29
FV=3310


Answer by ikleyn(52925) About Me  (Show Source):
You can put this solution on YOUR website!
.

The solution by @MathLover1 is INCORRECT.

She INCORRECTLY treat the problem as an Ordinary Annuity saving plan.

It is NOT an Ordinary Annuity, because it is deposited annually, but compounded semiannually.


////////////


Looking into her activity in last several days, I start thinking that

@MathLover1 presents a real danger for any visitor to this forum, because she provides wrong solutions even to simplest Math problems.


See my notes to her posts in past two days

https://www.algebra.com/algebra/homework/Finance/Finance.faq.question.1177850.html

https://www.algebra.com/algebra/homework/Volume/Volume.faq.question.1177847.html

https://www.algebra.com/algebra/homework/Surface-area/Surface-area.faq.question.1177846.html

https://www.algebra.com/algebra/homework/Triangles/Triangles.faq.question.1177800.html

https://www.algebra.com/algebra/homework/Triangles/Triangles.faq.question.1177804.html