Determine the value of the annuity for the indicated monthly deposit amount, the number of deposits, and the interest rate. You will need to determine the value for r to solve this problem. When finding r round it to the nearest ten thousandths. Deposit amount: $150; total deposits: 24; interest rate: 3%, compound monthly. The value for r is:____ The value of the annuity is $____

Answers

Answer 1

Answer: To find the value of the annuity for the indicated monthly deposit amount, number of deposits, and interest rate, we can use the following formula:

```A = PMT * ((1 + r/n)^(nt) - 1) / (r/n)```

Where:

- A is the value of the annuity

- PMT is the monthly deposit amount

- r is the interest rate

- n is the number of compounding periods per year

- t is the total number of years

In this case, the values are:

- PMT = $150 (monthly deposit amount)

- r = 0.03 (interest rate)

- n = 12 (compounding periods per year)

- t = 24/12 = 2 (total number of years)

Substituting these values into the formula above, we get:

```A = $150 * ((1 + 0.03/12)^(12*2) - 1) / (0.03/12)```

Simplifying this expression gives us:

```A = $150 * (1.0275^24 - 1) / 0.0025```

Evaluating this gives us:

```A = $3,789.09```

Therefore, the value of the annuity is $3,789.09.

To find the value of r, we can rearrange the formula above and solve for r:

```r = n * (((A * (r/n)) / PMT) + 1)^(1/(n*t)) - n```

Substituting the values we have, we get:

```0.03 = 12 * (((3789.09 * (0.03/12)) / 150) + 1)^(1/(12*2)) - 12```

Solving this equation gives us:

```r = 0.0330```

Rounding to the nearest ten thousandths as requested, the value of r is 0.0330.


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