Time to reach a financial goal
You have $127.15 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $210,000. You expect to earn 13% annually on the account. How many years will it take to reach your goal? Round your answer to two decimal places at the end of the calculations.
Answer: ____ years
Future value of an annuity
Find the future values of these ordinary annuities. Compounding occurs once a year. Round your answers to the nearest cent.
$400 per year for 4 years at 8%.
$
$200 per year for 2 years at 4%.
$
$300 per year for 14 years at 0%.
$
Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.
$400 per year for 4 years at 8%.
$
$200 per year for 2 years at 4%.
$
$300 per year for 14 years at 0%.
$
Problem
Future value for various compounding periods
Find the amount to which $300 will grow under each of these conditions:
10% compounded annually for 6 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
10% compounded semiannually for 6 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
10% compounded quarterly for 6 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
10% compounded monthly for 6 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
10% compounded daily for 6 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
Why does the observed pattern of FVs occur?
The future values increase because as compounding periods per year increase, interest is earned on interest less frequently
The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently
The future values increase because as compounding periods per year increase, interest is earned on interest more frequently
The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently
The future values decrease because as compounding periods per year decrease, interest is earned on interest more frequently