3. Fill the blanks. Use Ordinary annuity for (a) and annuity due for (b). Annuity Payment Time Nominal Interest Present Value Payment Frequency Period (years) Rate (%) Compounded of the Annuity (a) $1,000 6 Every month 14 Every 6 month 12 Monthly semiannually (b) $7,000 8 4 Fill the hlanks 6. Joe Suskind's previous month's balance on his revolving credit account was $1216.88. The account had the following activity for May: May 10, purchases, $270; May 15, a credit of $86.50; May 19, payment of $300; and May 25, purchases $122.25. The finance charge is calculated on the average daily balance at a 15% annual percentage rate. (a) How much is the finance charge for May? Answer: (b) What is Joe's new balance? Answer: FORMULAS Compound Amount (Future Value) A=P(1+i)" PV- Present Value - Investments at Compound Interest Annual Percentage Yield (APY) Future value-Ordinary annuity APY = (1+i)"-1 (1+i)"-1 FV = Pmt. i (1+i)"-1 X (1+i) Future value-Annuity due FV=Pmt 1-1+1 PV = Pmt x Present value-Ordinary annuity 1 (1+i) Present value-Annuity due PV = Pmt *(1+i) FVX Sinking fund payment i 1+i)"-1 Amortization payment PV 1-(1+i)