Annuities

Victore French mad a deposit of 5000 at the end of ech quarter to book bank, which pays 8% intrest compounded quarterly. After 3 years, Victor made no more depostis. What will be the banance in the account 2 years after the last deposit. I have not a clue on how to figure this one out here. I don't know if i have to set up a time line again here or not. I am using a texas instruments calculator here to figure these out on that. HELP

asked by Scott Ingraham
  1. It is a sinking fund for 3 years (12 payments of 2% each). Get the value of the sinking fund after the three years of deposits and interest payments.
    Then it becomes a plain old compound interest deposit. After two years multiply the sinking fund mount by 1.02^8

    posted by Damon
  2. Victore French mad a deposit of $5000 at the end of each quarter to book bank, which pays 8% intrest compounded quarterly. After 3 years, Victor made no more deposits. What will be the balance in the account 2 years after the last deposit.

    The 3 year accumulation is considered an Ordinary Annuity the final amount of which is derived from
    S = R[(1+i)^n - 1]/i where S = the total accumulated sum, R = the periodic rent, or payment, n = the number of payments and i = the periodic interest = I/100(4).
    Thus, S(12) = 5000[(1.02)^12 - 1]/.02.

    The further growth of the final amount, S(12), 2 years after the last deposit derives from S = P(1+i)^n.

    Therefore, S = S(12)(1.02)^8

    posted by tchrwill
  3. i meant the guys above sorry bout that.

    posted by Rickter
  4. Rickter is right the answer is 78574.78785
    i got that by using 5000*13.4121 which gave me 67060.50 then 67060.50*1.1717= 78574.78785 whish is the answer.

    1st you use amount of annuity chart and then you use sinking fund value.
    The other guys are stupid. show the answers next time.

    posted by Homie

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