Value Worksheet With Answer Key Page 7
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88.5
For each situation, identify R, i, and n. Then use the formula
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R 3(1 1 i)
2 14
n
A 5
i
to determine the amount of the annuity.
Payment
Interest
Compounding
Term of
Amount
($)
Rate
Period
Annuity
($)
a)
1000
8%/a
annually
3 years
1
b)
500
7
%>a
quarterly
8.5 years
2
c)
200
3.25%/a
monthly
5 years
Calculate the regular deposit made twice a year for 5 years at 6%/a
5.
compounded semi-annually to accumulate an amount of $4000.
Carollynne has found her dream home in Pictou, Nova Scotia. It is
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selling for $500 000. When she retires 2 years from now, she plans to
sell her present house for $450 000 and move. She decides to set aside
$900 every two weeks until she retires in a fund earning 10.5%/a,
compounded every second week. What is the difference between the
future value of Carollynne’s investment and the extra $50 000 she
needs for her dream home?
Yanmei has contributed $250 to an RRSP at the end of each 3-month
7.
period for the past 35 years. During this time, the RRSP has earned an
average of 11.5%/a compounded quarterly.
How much will the RRSP be worth at maturity?
a)
How much of the investment will be interest earned over the
b)
35 years?
Miguel wants to buy an entertainment system as a gift for his sister’s
8.
wedding. He estimates that when she marries 1 year from now, the
system will cost $2499, plus GST (government sales tax) at 6% and
PST (provincial sales tax) at 8%. He knows he can deposit $225 a
month into an account earning 3.5%/a compounded monthly. Will he
have enough money to buy the gift? Explain.
At the end of every 6 months, Marcia deposits $100 in a savings account
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T
that pays 4%/a compounded semi-annually. She made the first deposit
when her son was 6 months old, and she made the last deposit on her
son’s 21st birthday. The money remained in the account until her son
turned 25, when Marcia gave it to him. How much did he receive?
499
NEL
Solving Financial Problems Involving Exponential Functions
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