Time value Personal Finance Problem You have ?$1,800 to invest today at 8?% interest compounded annually. a....

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Time value Personal Finance Problem You have ?$1,800 to investtoday at 8?% interest compounded annually.
a. Find how much you will have accumulated in the account at theend of? (1) 3 ?years, (2) 6 ?years, and? (3) 9 years.
b. Use your findings in part a to calculate the amount ofinterest earned in? (1) the first 3 years? (years 1 to 3?), ?(2)the second 3 years? (years 4 to 6?), and? (3) the third 3 years?(years 7 to 9?).
c. Compare and contrast your findings in part b. Explain why theamount of interest earned increases in each succeeding 3 dash yearperiod.

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3.9 Ratings (464 Votes)

a Find how much you will have accumulated in the account at the end of 1 3 years For the 3 years you can save 1800 per year we can use FV of an Annuity due formula as the deposits are made at the beginning of the year to calculate the future value of after 3 years savings by you FV PMT 1i 1i n1 i Where Future value of annual savings FV PMT Annual savings 1800 n N number of payments 3 years i IY interest rate per year 8 Therefore FV See Answer

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