Answer:
1) B. Future value of an annuity
2) E. 924.86
Explanation:
This question is divided into two
The first is to determine what kind of value from the following
A. Present value with compound interest
B. Future value of an annuity
C. Present value of an annuity
D. Amortization
E. Sinking Fund
The second question is to find the monthly payment
A.986.78
B. 724.94
C. 1003.78
D.872.46
E. 924.86
Solution
1) since the company needs the $35,000 in 3 years, it means the rate to calculate for is the Future Value of an Annuity and this will be used for determining the monthly payment in the second question
2)First, what is the formula for the Future Value of an annuity
= FV=P[((1+r)^n - 1)/ r]
Where
FV= The future value = $35,000
r= rate = 3.4% per year.
Since, it is compounded monthly, the monthly rate = 3.4%/ 12 = 0.2833%
n = 36 months
and P is the monthly payment required
Therefore,
We solve finding the value of P
= 35000=P[((1.002833)^36 - 1)/ 0.002833]
= 924.86
