+0

0
140
6
+32

Veronica plans to make a \$95 a month annuity payment to an account that earns 3% annual interest to build up her savings. How much can she save in 10 years with this plan?

A. \$7,122.49

B. \$13,275.43

C. \$21,846.27

D. \$38,960.76..

I think the answer is D but I'm not very good at this stuff... Please help it's URGENT!!!

Mar 20, 2020

#1
+1956
+1

Hint:

Since Veronica earns 3% or 0.03 annual (per year) interest, the amount she earns in ten years will be (0.03)^10.

We can easily write an equation that shows how much Veronica wants to earn.

Hope this helped!

Mar 20, 2020
#2
+32
+1

this doesn't help... I don't under stand

Roses  Mar 20, 2020
#3
+23566
+2

For payments made at the BEGINNING OF THE MONTH   (payment due annuity)

​P=PMT×((1+r)n−1)/r  ​×  (1+r)​

For payments made at the END OF THE MONTH (ordinary annuity....more common)

P =PMT X ((1+r)n  -1)/r       I'll use this one

PMT = 95      r = 3%/12months = .0025 % per month      n = 10 years * 12 months/year  = 120 months

P = 95 ( ( 1+.0025)120 -1 ) / .0025   =  \$ 13 275.43

Mar 20, 2020
#4
+32
+1

thank you for breaking that down that really helped me understand it... I have a lot of trouble with this stuff.. I really appreciate it.

Roses  Mar 20, 2020
#5
+23566
+1

You're welcome !!        I HOPE you understand it !

ElectricPavlov  Mar 20, 2020
#6
+109509
0

Hi Roses, welcome to web2calc forum

Mar 21, 2020