Explanation Given: Periodic payment R = $ 5000 . Interest rate per annum is 10% compounded semiannually and number of years is 7 1 2 . Explanation: A firm of attorneys makes semiannual deposits of $5000 for 7 1 2 years. Deposits earn 10% compounded semiannually. Interest is compounded semiannually. So i = 1 2 × 10 % = 0.05 Number of periods will be n = 2 × 7 1 2 = 2 × 15 2 = 15 As deposits are made at the end of each semiannual period, it is a case of ordinary annuity. Use the formula for the future value of an ordinary annuity: S = R [ ( 1 + i ) n − 1 i ] Here, S is the future value, R is the periodic payment, i is the interest rate per period, and n is the number of periods. Substitute R = $ 5000 , i = 0.05 , and n = 15 ; the future value of the given annuity will be S = R [ ( 1 + i ) n − 1 i ] = 5000 [ ( 1 + 0

11th Edition

ISBN: 9780321979438

Author: Margaret L. Lial, Raymond N. Greenwell, Nathan P. Ritchey

Publisher: PEARSON

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Chapter 5, Problem 71RE

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for $712$ years.

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Chapter 5, Problem 70RE

Chapter 5, Problem 72RE

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Chapter 5 Solutions

Finite Mathematics (11th Edition)

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for 7 1 2 years.

Solution Summary: The author calculates the future value and interest earned of an ordinary annuity with semiannual deposits of 5000 at 10% compounded quarterly at the end of each 6-month period.

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for $712$ years.

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for 7 1 2 years.

Solution Summary: The author calculates the future value and interest earned of an ordinary annuity with semiannual deposits of 5000 at 10% compounded quarterly at the end of each 6-month period.

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for 712<m:math><m:mrow><m:mn>7</m:mn><m:mfrac><m:mn>1</m:mn><m:mn>2</m:mn></m:mfrac></m:mrow></m:math> years.

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The future value and the amount of interest earned of the ordinary annuity with semiannual deposits of $5000 at 10% compounded semiannually at the end of each 6-month period for $712$ years.