# Interest and Time Value of Money

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Find the future value of the following annuity.

$500 deposited at the end of each 6-month period for 8 years; money earns 6% compounded semiannually.

FVoa = PMT [((1 + i)n - 1) / i]

Where:

FVoa = Future Value of an Ordinary Annuity

PMT = Amount of each payment

i = Interest Rate Per Period

n = Number of Periods

PMT = 500, i = 6% / 2 = 3%, n = 8 * 2 = 16 compounding periods

So the future value is $10078.44.

Find the amount of each payment that must be made into a sinking fund to accumulate the following amount. (Recall, in a sinking fund, payments are made at the end of every interest period.)

$57,000; money earns 6% compounded semiannually for 8 ½ years.

In this problem, we know the future value of the ordinary ...

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