Solve this problem

1. The interest rate on a saving plan is 6% compound annually. If %600 is deposited in the plan at
the end of each year for 10 years, what amount will be in the fund at the end of the 10 year?
2. Find the amount of an annuity of $480 payable at the end of every 6 months of 14 years if the
interest rate is 10% compound semiannually.
3. If $370 is payable at the end of each quarter for 5 years at 12% interest compounded quarterly,
what is the amount of the annuity?
4. At the end of each quarter, Webster Company placed $2,500 in a fund to provide for the
replacement of equipment. The fund paid 8% interest compounded quarterly. Find (a) the
amount in the find and (b) the total interest at the end of 6 years?
5. John Fischer deposited $420 at the end of every 6 month in a fund that earns 12% interest
compound semiannually. How much was in the fund at the end of 7 ½ years?
6. The Appalachian Power and Water Company sold bonds that were to be redeemed in 20 years.
To provide for funds to repay the principal on the bonds, the company invested $54,369.11 at
the end of each year at 6% interest compounded annually. To the nearest dollar, what is the
face value of the bonds?
7. Paula Ramundo has earned $1,500 a month in net pay for the past year. She deposited 10% of
her net pay at the end of each month in a savings account that pays 12% interest compounded
monthly. How much was in the fund at the end of year?
8. At the of each month for 1 ½ years, John Flores deposited $350 into a fund that earns interest at
6% compounded monthly. How much will be in the fund 2 ½ years after the last deposit was
made?
Example : David Joplin is thinking of depositing $250 at the end of each calendar quarter in a saving bank
that pays 8% interest compounded quarterly. If he does so and allows the deposits and interest to
accumulate, how much will be in the account at the end of 10 years? Use table 10-3

Solution : 40 periods at 2% = 60.40198318

60.401983 x $250 = $15,100.50 amount of annuity

Exercise 10-6 A. for each problem below, use Table 10-3 to find the amount of the ordinary annuity.

Payment Payment Term Rate Compounded

Interval
1 $3,000 1 year 20 years 5% Annually
2 1,200 3 month 6 ¾ years 8% Quarterly
3 400 1 month 3 years 18% Monthly
4 9,700 1 year 17 years 11% Annually
5 680 6 month 20 years 16%
6 750 3 month 12 ½ years 12%
7 3,500 6 month 13 ½ years 20%
8 250 1 month 2 ½ years 12%