Doug: As a young man, beginning at age 22, Doug was conservative and was concerned about his future. Each year he invested his $2000 bonuses in a savings program earning 3% interest compounded monthly. After 16 years, at age 38, Doug decided to have some fun in life and he began spending his $2000 bonuses on vacations instead of saving them. This continued until the end of his 64th year. Meanwhile, his savings continued to grow, compounded monthly at 3%.

1. Write in words the types of calculations needing to be done to solve this problem. (Hint: There are two steps.)

2. What does it mean to compound monthly?

3. Using the correct formulas, show the two steps needed to calculate the value of the account at the end of Dougs 64th year.

It is important to realize that for the first 16 years, if Dougs money was compounded monthly, he was also investing monthly. Therefore, for the annuity, assume that 1/12 of $2000 (rounded to the nearest cent) was the regular payment being invested each month.