Friday, 15 May 2015

Find the amount accumulated in the increasing annuities. $110 deposited monthly for 6 years at 4 % per year. ( Assume the end of period deposits...

Since $110 are deposited monthly, then $110*12 = $1320 are deposited at the end of each year, for the next 6 years in an account paying 4% per year compounded annualy.


To find the value accumulated in increasing annuities you need to take a look at each of the $1320 payment.


Hence, and the formula used is


The first payment will produce a compound...

Since $110 are deposited monthly, then $110*12 = $1320 are deposited at the end of each year, for the next 6 years in an account paying 4% per year compounded annualy.


To find the value accumulated in increasing annuities you need to take a look at each of the $1320 payment.


Hence, and the formula used is


The first payment will produce a compound amount of



You need to use n=5 instead n=6 since the money is deposited at the end of the first year and earns interest for only 5 years.


Hence, the future value of annuity is:



Notice that the terms of the sum are the terms of a geometric sequence, having the ratio q = 1.04 and the first term b = 1320.






Hence, evaluating the amount accumulated in the increasing annuities yields

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