Question 1122074
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There are two types of saving accounts that work in accordance with this scheme:


        a)   Ordinary Annuity saving plan,   and


        b)   Annuity Due saving plan.


Under Ordinary Annuity saving plan you deposit  $2000  at the end of each year;

under Annuity Due saving plan you deposit  $2000  at the beginning of each year.


I will give you the solution for the Ordinary Annuity plan only.


<pre>
     (When such a problem comes without explicit naming the plan, I am 100% sure that it means an Ordinary Annuity).
</pre>

The formula is


<pre>
    The future value in 20 years = {{{2000*(((1+0.07)^20-1)/0.07))}}} = $81,990.98.


    Notice that you deposit only $2000*20 = $40,000.

    The rest is compound percents that the account earns in 20 years.
</pre>

On both plans, you can learn and read from the lessons

&nbsp;&nbsp;&nbsp;&nbsp;- <A HREF=http://www.algebra.com/algebra/homework/Sequences-and-series/Ordinary-Annuity-saving-plans-and-geometric-progressions.lesson>Ordinary Annuity saving plans and geometric progressions</A>

&nbsp;&nbsp;&nbsp;&nbsp;- <A HREF=http://www.algebra.com/algebra/homework/Sequences-and-series/Annuity-due-saving-plans-and-geometric-progressions.lesson>Annuity Due saving plans and geometric progressions</A>

in this site.