Question

Find the interest earned and the future value of an annuity with weekly payments of $400 for three years into an account that pays 7% interest per year compounded semiannually.

Answer 1

the interest earned= 93.401

and the future value of an annuity= 493.401

Explanation:

Given Data:

Interest rate= 7%

time,t = 3 years

weekly payment, P= 400

At the end of 3 years, final investment A= ?

n= 52 as it is weekly

As per the interest formula

A= P(1+r/n)^nt

Putting value in above equation

=
`400\left(1+(0.07)/(52)\right)^(156)`

= 493.401

Interest earned = A-P

= 493.401-400

= 93.401 !