1. a) Suppose you deposit $2500 each year for 20 years in a savings account paying 5% compounded annually. How much would the account contain after 20 years? How much of the FV did you actually contribute?

If you could double only one of these which would benefit you more? b) The amount invested. How much of the FV did you actually contribute?

c) The interest rate. How much of the FV did you actually contribute?

d) The time. How much of the FV did you actually contribute?

e) Write a short paragraph describing the results of parts a) d).

2. Julia deposits $100 at the end of each quarter for 20 years into an account paying 4.2% annual interest compounded quarterly. a) How much is in the account at the end of 20 years? b) How much did Julia actually contribute to the account? c) How much interest did the account earn in those 20 years?

3. Mr. and Mrs. Lopez have a new son and decide to start an account (sinking fund) for his college education. They decide to put $100 into the account each month. The account pays 4% annual interest compounded monthly. They start this account when he is 1 year old. How much will be in the account when the child is 18 years old?

Answer rating: 100% (QA)

Solving Savings Account Problems 1 Future Value of Savings Account a Amount After 20 Years We can use the Future Value FV formula for a savings accoun... View the full answer