You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly

Question

You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit $31,100 at the end of each year for the next 9 years. You expect to earn 13 percent each year.

Determine how much you will have saved after 9 years. (Future Value of $1, Present Value of $1, Future 1.Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to 2 decimal places.)

Balance in the Savings account:__________

Determine the amount saved if you were able to deposit $33,600 each year. (Future Value of $1, Present 2.Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to 2 decimal places.)

Balance in the Savings Account:________

3.Determine the amount saved if you deposit $31,100 each year, but with 15 percent interest. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to 2 decimal places.)

Balance in the Savings Account:_______

You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit $31,100 at the end of each year for the next 9 years. You expect to earn 13 percent each year.

Explanation / Answer

Future value of annuity = P×[(1+r)^n-1]÷r

r is interest rate per period

P is payment per period

n is number of payments

1)

= $31,100×[(1+13%)^9-1]÷13%

Balance in savings account = $479,428.49

2)

= $33,600×[(1+13%)^9-1]÷13%

Balance in savings account = $517,967.76

3)

= $31,100×[(1+13%)^9-1]÷15%

Balance in savings account = $415,504.69

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