Question

La. A friend of yours, Grace, wants to purchase a house in five years. To save for the house, Grace decides to deposit $ 112,000 in a savings account on January 1 of this year. The savings account will earn 6% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn). b. At the end of the following year, a different friend, Claire, plans to deposit $ 9,000 in a savings account. The account will earn 9% annual interest, which will be added to the fund balance at year-end. Claire will make her first deposit at the end of this year.
(show computations and round to the nearest dollar):
(b) In (b) , what will be the balance in the savings account at the end of the 8 th year (i.e., after 8 deposits)? What is the interest earned on the 8 deposits?

Answer 1

The balance in the savings account at the end of the 8th year (i.e., after 8 deposits) is  $99,256, and the interest earned on the 8 deposits is $27,256

The future value of annuity is a calculation that measures how a good deal a chain of fixed bills might be really worth at a specific date in the future whilst paired with a particular interest price. The word “value” in this term is the coin's potential that a sequence of future payments can gain.

The equation to find future value of the annuity:

Future Value = E ( ( 1 + r)^p - 1 ) / r

E = Annual deposit = $9,000

r = Interest rate = 9%

P = 8 years

FV = Amount available = 9,000 ( 1.09^8 - 1 ) / .09 = $99,256

Interest = 99,256 - 9000 * 8 =  $27,256

Future value is the value of a current asset at a future date based on an assumed fee of growth. The future price is vital to investors and economic planners, as they use it to estimate how an awful lot of funding made today may be worth it in the future.

Learn more about the future value of annuity here brainly.com/question/14702616

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