13)You plan to save $5,800 per year for the next 11 years. After the last deposi

Question

13)You plan to save $5,800 per year for the next 11 years. After the last deposit, you will keep the money in the account for 4 more years. The account will earn an interest rate of 6.1 percent. How much will there be in the account 15 years from today?

14)You are set to receive an annual payment of $11,900 per year for the next 15 years. Assume the interest rate is 6.8 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year?

Explanation / Answer

13)

Future value of annuity = 5,800 [( 1 + 0.061)11 - 1] / 0.061

Future value of annuity = 5,800 * 15.050673

Future value of annuity = 87,293.9048

Future value at year 15 = 87,293.9048 ( 1 + 0.061)4

Future value at year 15 = $110,623.0062

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