# Thread: Ordinary Annuities: Future Value and Present Value

1. ## Ordinary Annuities: Future Value and Present Value

 Need help with 2 problems. 1.)Charlene has made contributions of 3,400 dollars to her RRSP at the end of every half year for the past seven years. The plan has earned 9% compounded semiannually. She has just moved the funds to another plan earning 7.5% compounded quarterly, and will now contribute $2400 at the end of every three months. What total amount will she have in the plan five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places.)  2.)What price will a finance company pay for a conditional sale contract requiring 12 monthly payments of$176.00, if the company requires a rate of return of 21% compounded semiannually? The first payment is due one month from now. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

2. ## Re: Ordinary Annuities: Future Value and Present Value

Originally Posted by TheKid1992

1.)Charlene has made contributions of 3,400 dollars to her RRSP at the end of every half year for the past seven years. The plan has earned 9% compounded semiannually. She has just moved the funds to another plan earning 7.5% compounded quarterly, and will now contribute \$2400 at the end of every three months.

What total amount will she have in the plan five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Step1: calculate value at end of 7 years
c = 3400
i = .09/2 = .045
n = 7*2 = 14
v = ?
v = c*[(1 + i)^n - 1] / i

Step 2: calculate value of v 5 years later
i = .075/4 = .01875
n = 5*4 = 20
v = v(1 + i)^n

Step3: calculate accumulation during last 5 years
c = 2400
i = as in step2
n = as in step 2
w = ?
w = c*[(1 + i)^n - 1] / i

Total amount = v + w