3. Calculate following problem with ordinary annuities: * Payments of $1250 each are made at the end of every year for 5 years to a savings account. Find the accumulated value or future value of the account at the end of 5 years. The interest rate is 5% compounded annually. * A vacation property is bought for $3000 down and payments of $1000 at the end of each six months for 12 years. The interest rate is 7% compounded semi-annually. What is the cash value? * Ali set up a savings plan with TD Canada Trust whereby he deposits $250 at the end of each quarter for seven years at a rate of 5% compounded quarterly. How much will be in his account just after he makes his last deposit?
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For the first problem, we have an ordinary annuity with annual payments of $1250 for 5 years at an interest rate of 5% compounded annually. To find the future value (FV) of this annuity, we can use the formula: FV = P * [(1 + r)^n - 1] / r where P is the payment Show more…
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