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Understanding Ordinary Savings Annuities Use the simple interest formula method to find the future value of an ordinary annuity of 53

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Understanding Ordinary Savings Annuities Use the simple interest formula method to find the future value of an ordinary annuity of 53.400 paid annually after three years at 3.6% annual interest. Find the total interest earned, We will be using the following concepts to answer the questions 1. Compound Interest is repeated simple interest, where each compounding period interest is earned on the principal plus any previous interest earned 2 Simple Interest Formula is - PRT When calculating interest within a single period. T 1 period, R Periodic Interest Rate 3. In our anruty problems, the intale (PV) will be assumed to be 50 For an Ordinary Annuity, payments are made at the END of each period a) What is the periodic interest rate? (We as a decimal rounded to 5 places as needed). R=0 b) Calculate the value of the annuity at the end of each year (compounding period) Round each answer to the nearest cont Period Beginning Balance Payment I PRT Begal. Int Pins 0 3,400 Interest Perlod Balance 0 1 2 2.400 3.400 3 3,400 c) Complete the following. Round wwers to the recent Prune minuty value ** The total deposits made to the annut The tal interest earned i 1 Understanding Ordinary Savings Annuities Use the simple interest formula method to find the future value and interest earned on the following ordinary annuity investment: Deposits of $1450 made semiannually in an account earning 2.6% interest compounded semiannually for two years. a) What is the periodic interest rate? (Write as a decimal rounded to 5 places as needed). R=D b) Calculate the value of the ordinary annuity at the end of each period. Round each answer to the nearest cont. Period Period Interest Period Balance Payment 1450 1 N 1450 3 1450 4 1450 c) Complete the following. Round answers to the nearest cent. Future annulty value is $ The total deposits made into the annuity is $ The total interest earned is $