00:01
In a, we want to find the future value of an annuity when our annual payments are 1900, our interest rate is 8%, our term is 10 years, and the interest is compounded annually.
00:22
So then our formula for the future value tells us that future value is equal to the payments times 1 plus r to the t minus 1 over r.
00:39
So that gives us future value of 1900 times 1 .08 to the 10 minus 1 divided by 0 .08, and that is equal to, so this is equal to 27 ,524 .47.
01:07
We want the nearest cent, so $27 ,524 .47.
01:19
And then in b, we want the future value of an ordinary annuity with payments of 70, paid quarterly, term is 5 years, which is 20 quarters, and our interest rate, r, is 6%.
01:53
That's an annual rate, but we're compounding quarterly.
01:58
So that means that we're going to use r is equal to 0 .06 divided by 4, which is 0 .015...