   Chapter 12.I, Problem 13RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Solve the following exercises by using Table 12-1.Jess Thomas deposits $100 each payday into an account at 6% interest compounded monthly. She gets paid on the last day of each month. How much will her account be worth at the end of 30 months? To determine To calculate: The value of account after 30 months where$100 is deposited each payday into an account, time duration is 30 months, nominal rate of return is 6% and interest is compounded monthly.

Explanation

Given Information:

Annuity payment is $100, time duration is 30 months, nominal rate of return is 6% and interest is compounded monthly. Formula used: Steps for calculating the future value of an ordinary annuity are: Step1: First the interest rate per period for the annuity is calculated. Step2: The number of annuity periods should then be determined. Step 3: Use table 12-1 to locate the ordinary annuity table factor that lies on the intersection of the rate-per period column and number-of-periods row. Step 4: Finally future value of the ordinary annuity is calculated. The formula to compute the future value of ordinary annuity is, Future Value=Ordinary annuity table factor×Annuity payment Calculation: Consider that Annuity payment is$100, time duration is 30 months, nominal rate of return is 6% and interest is compounded monthly.

As the interest is compounded monthly. So, the interest rate period is;

6%12=0

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