Given the variety of problems possible using this series of

Given the variety of problems possible using this series of topics, post two problems: one illustration involving a single amount and the other involving an annuity.

Solution

Problem 1: What will be the value of $20,000 deposited today in a savings account with 6% interest paid annually? The amount is kept in the account for 20 years.

FV of the amount= PV*(1+r)^n

= 20000*1.06^20=

Problem 2: What is the value of $2000 deposited annually for 20 years in an account which yields 6% interest compounded annually?

FV= Annuity*((1+r)^n-1)/r

= 2000*(1.06^20 -1)/0.06=