use the annuity formula

1 + r n 1 A=P N

1. Todd and Tami pay $400 every 3 months for 6 years into an ordinary annuity paying 8% compounded quarterly. What is the value of the annuity at the end of 6 years?

2. Laura wants to invest an amount of money every 3 months so that she will have $12,000 in 3 years to buy a new car. The account pays 8% compounded quarterly. How much should she deposit each quarter?

3. A company establishes a sinking fund to provide for the payment of a $150,000 debt ma- turing in 4 years. Contributions to the fund are to be made each year. Find the amount of each annual deposit if interest is 8% per annum.

4. The Crown Colony Condo Association is required by law to set aside funds to replace its commonarea carpet. The current cost to replace the carpet is $20,000 and it will need to be replaced in 6 years. The cost of the carpet is expected to increase at the rate of 2% per year. Use the compound interest formula to compute the cost of the carpet at the end of 6 years. Determine the semiannual payment required to have the funds to replace the carpet in 6 years.

5. How many years will it take to save $1,000,000 if you place $600 per month in an account that earns 7% compounded monthly.