Simple Annuities #3

**Ife** · December 7th 2009, 07:02 AM

This is the last question i have here. It reads:

Frank deposited $1,250 at the end of every month into a retirement account for the last 15 years. The account paid interest of $J_{12}= 15.4$ % for the 1st 6 years. This rate is dropped to $J_{12}=10$ % for the next 2 yrs until it became $J_{12}=12$ % for the remainder of the period.

a. How much money does he have in the fund at the end of the 15 yrs?

b. What is the total interest earned in the 15 yrs?

c. How much interest did he earn during the 7th year?

I'd like some guidance please???

I'm thinking that the total in the fund would be calculated like this: $1250 * \left[ \left[ \frac{(1+ \frac{.154}{12})^{12*6}-1}{( \frac{.154}{12})} \right] + \left[ \frac{(1+ \frac{.10}{12})^{12*2}-1}{( \frac{.10}{12})} \right] + \left[ \frac{(1+ \frac{.12}{12})^{12*7}-1}{( \frac{.12}{12})} \right] \right]$
Thanks.

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