1A). Tom is saving for an engagement ring. If he deposits $500 payments into an

Question

1A). Tom is saving for an engagement ring. If he deposits $500 payments into an account (one at the end of each year) that earns 6% interest compounded annually, how much will he have saved by the end of the 10th year?

A. 6,590.39

B. 6,554.39

C. $13,435.18

D. $895.42

1B). Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

A. $10,670.81

B. $3,092.52

C. $3,895.68

D. $3,600.00

Explanation / Answer

1A) Deposit 500 FVAF(10, 6%) 13.1808 Amount    6,590.397 1B 1200 FVAF 3.2464 Amount 3895.68

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