# Anuities

• Nov 21st 2011, 05:12 AM
hughdini
Anuities
Hi all, I was wondering if anyone could help me solve these two problems:

Q1. More money 4 u have offered an anuity that pays 5.4% compounded monthly. if 1429 is deposited into this anuity every month, how much is in the account after 11 years? How much is the interest?

Q2. In order to make a down payment on a house a couple deposits 402 into an account paying 3% compounded monthly. If the payments are made at the end of each period how much money will be in the acount in 6 years?
• Nov 22nd 2011, 02:04 PM
terrorsquid
Re: Anuities
Q1) A little ambiguous, but assuming the situation is you are depositing $1429 into an account every month and earning$\displaystyle j_{12} = 5.4$% on that account, then I would solve it as follows: Monthly rate$\displaystyle = \frac{0.054}{12} = 0.0045$Future value of your annuity$\displaystyle = 1429\left(\frac{1.0045^{132}-1}{0.0045}\right)\displaystyle = 256841.15$To find the amount of interest paid, simply subtract all the deposits of$1429 and see what you have left over.

Question two is exactly the same, accept your regular payment is now 402, your rate is 0.03/12 and the number of payments is 6*12.