Janet Boyle intends to deposit $220 per year in a credit union for the next 10 years,
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Question:
Janet Boyle intends to deposit $220 per year in a credit union for the next 10 years, and the credit union pays an annual interest rate of 9%.
a.Determine the future value that Janet will have in 10 years, given thatend-of-period deposits are made and no interest iswithdrawn, if
(1) $220 is deposited annually and the credit union pays interest annually.
(2) $110 is deposited semiannually and the credit union pays interest semiannually.
(3) $55 is deposited quarterly and the credit union pays interest quarterly.
b.Use your finding in part a to discuss the effect of more frequent deposits and compounding of interest on the future value of an annuity.
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