Answer to Question #215676 in Finance for Anggita

Question

You decide to begin saving toward the purchase of a new car in 5 years. If you put $1.000 at the end of each of the next 5 years in a saving account paying 6 percent compounded annually, how much will you accumulate after 5 years? What would be the ending amount if the payment were made at the beginning of each year? What would be the ending amount if $500 payments were made at the end of each of 6-month period for 5 years and the account paid 6 percent compounded semiannually?

Answer 1

a $)$ $ 1000$($ $[$ $($ 1$+$ 0.06$)$ $^5-$ 1$]$ $/$ 0.06$)$ $=$ $ 5637.10

b$)$ $ 1000$($ 1.06$^5+$ 1.06$^4+$ 1.06$^3+$ 1.06$^2+$ 1.06$)$ $=$ $ 5975.32

c$)$$ 500$($ $[$ $($ 1$+$ 0.03$)$ $^10-$ 1$]$ $/$ 0.03$)$ $=$ $ 5732.00