TUTORIAL WITH WORK SHOWN FOR THE FOLLOWING QUESTIONS

1. Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.)

$1500/semiannual period for 10 years at 7%/year compounded semiannually

1. Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.)

$140/week for 8.5 years at 8.4%/year compounded weekly

1. Find the present value of the ordinary annuity. (Round your answer to the nearest cent.)

$200/month for 14 years at 9%/year compounded monthly

1. If Jackson deposits $130 at the end of each month in a savings account earning interest at a rate of 6%/year compounded monthly, how much will he have on deposit in his savings account at the end of 7 years, assuming he makes no withdrawals during that period? (Round your answer to the nearest cent.)

2. Robin, who is self-employed, contributes $6500/year into a Keogh account. How much will he have in the account after 35 years if the account earns interest at the rate of 7.5%/year compounded yearly? (Round your answer to the nearest cent.)

3. The Pirerras are planning to go to Europe 4 years from now and have agreed to set aside $190/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 9%/year compounded monthly, how much money will be in their travel fund at the end of the fourth year? (Round your answer to the nearest cent.)

4. Karen has been depositing $200 at the end of each month in a tax-free retirement account since she was 26. Matt, who is the same age as Karen, started depositing $280 at the end of each month in a tax-free retirement account when he was 33. Assuming that both accounts have been and will be earning interest at the rate of 8.5%/year compounded monthly, who will end up with the larger retirement account at the age of 65?

5. Luis has $180,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to roll over his assets to a new account. Luis also plans to put $3500/quarter into the new account until his retirement 30 years from now. If the new account earns interest at the rate of 7%/year compounded quarterly, how much will Luis have in his account at the time of his retirement? Hint: Use the compound interest formula and the annuity formula. (Round your answer to the nearest cent.)

6. Lupe made a down payment of $1700 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 11%/year compounded monthly. Under the terms of her finance agreement she is required to make payments of $220/month for 36 months. What is the cash price of the car? (Round your answer to the nearest cent.)

7. The Johnsons have accumulated a nest egg of $17,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1100/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1400. If local mortgage rates are 8.5%/year compounded monthly for a conventional 30-year mortgage, what is the price range of houses they should consider? (Round your answers to the nearest cent.)

8. Lauren plans to deposit $6000 into a bank account at the beginning of next month and $225/month into the same account at the end of that month and at the end of each subsequent month for the next 4 years. If her bank pays interest at a rate of 7%/year compounded monthly, how much will Lauren have in her account at the end of 4 years? (Assume she makes no withdrawals during the 4-year period. Round your answer to the nearest cent.)

9. From age 25 to age 40, Jessica deposited $175 at the end of each month into a tax-free retirement account. She made no withdrawals or further contributions until age 65. Alex made monthly deposits of $350 into his tax-free retirement account from age 40 to 65. If both accounts earned interest at the rate of 5%/year compounded monthly, who ends up with the bigger nest egg upon reaching the age of 65? Hint: Use both the annuity formula and the compound interest formula.