Use the following problem to answer questions 9 and 10. plans to buy a townhome

Question

Use the following problem to answer questions 9 and 10. plans to buy a townhome in 2 years. He'd like to have a down payment towards the purchase of the townhome. He can deposit $1,400 quarterly in an account that earns 1.94% per year compounded quarterly years? . How much wil he have for a down payment in 2 9. Identify the type of problem. a. Future Value with compound interest b. Present Value with compound interest c. Future Value of an Annuity d. Present Value of an Annuity e. Future Value with simple interest 10. Answer the question in the problem. a. $11,391.98 b. $10,795.12 c. $13,107.39 d. $8,712.78 e. $13,121.72

Explanation / Answer

9)
future value for an annuity

r = 1.94 % per year compounded quarterly
P = 1400
there are 8 quaeter in 2 year
hence
FV = P((1+ r)^n - 1)/r
= 1400 ((1 + 0.0194/4)^8 - 1)/ (0.0194/4)
=11391.9753

option A) is correct

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