00:01
I'm going to do this in two slides.
00:01
In part a, we know a final value of an annuity is $10 ,000.
00:11
We do not know the r value.
00:15
We know the interest rate is compounded quarterly at 8%.
00:21
So we're going to use an interest rate of 0 .02, just dividing by 4.
00:26
And then over 8 years.
00:31
So quarterly, that's four times a year.
00:33
So our end value is going to be 32.
00:38
Okay, so plugging into our formula, we have 10 ,000 equals r times 1 .02 to the 32nd power minus 1 divided by 0 .02.
00:57
Okay, that's going to give us 10 ,000 equals r times.
01:03
I'm going to put that in the calculator.
01:12
So we're using 0 .02 to the 32 power.
01:23
That's going to give us a value of around 44 .22 and some change.
01:29
We're just going to keep that in the calculator.
01:33
And then divide both sides by that number.
02:02
We're going to get $226 .11 for our r value.
02:08
So it means if he makes deposits of $226 .11, it'll be on his way to have in $10 ,000 in that account...
