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We can find the value of the annuity after n deposits using the formula for the sum of the first n terms of a geometric series. In 6 years, there are 72 months, so n = 72. We can substitute a 1 = 50 ,   r = 1.005 ,   and   n = 72 into the formula, and simplify to find the value of the annuity after 6 years.

S 72 = 50 ( 1 1.005 72 ) 1 1.005 4 , 320.44

After the last deposit, the couple will have a total of $4,320.44 in the account. Notice, the couple made 72 payments of $50 each for a total of 72(50) = $3,600 . This means that because of the annuity, the couple earned $720.44 interest in their college fund.

Given an initial deposit and an interest rate, find the value of an annuity.

  1. Determine a 1 , the value of the initial deposit.
  2. Determine n , the number of deposits.
  3. Determine r .
    1. Divide the annual interest rate by the number of times per year that interest is compounded.
    2. Add 1 to this amount to find r .
  4. Substitute values for a 1 , r , and n into the formula for the sum of the first n terms of a geometric series, S n = a 1 ( 1 r n ) 1 r .
  5. Simplify to find S n , the value of the annuity after n deposits.

Solving an annuity problem

A deposit of $100 is placed into a college fund at the beginning of every month for 10 years. The fund earns 9% annual interest, compounded monthly, and paid at the end of the month. How much is in the account right after the last deposit?

The value of the initial deposit is $100, so a 1 = 100. A total of 120 monthly deposits are made in the 10 years, so n = 120. To find r , divide the annual interest rate by 12 to find the monthly interest rate and add 1 to represent the new monthly deposit.

r = 1 + 0.09 12 = 1.0075

Substitute a 1 = 100 , r = 1.0075 , and n = 120 into the formula for the sum of the first n terms of a geometric series, and simplify to find the value of the annuity.

S 120 = 100 ( 1 1.0075 120 ) 1 1.0075 19 , 351.43

So the account has $19,351.43 after the last deposit is made.

Got questions? Get instant answers now!
Got questions? Get instant answers now!

At the beginning of each month, $200 is deposited into a retirement fund. The fund earns 6% annual interest, compounded monthly, and paid into the account at the end of the month. How much is in the account if deposits are made for 10 years?

$92,408.18

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Access these online resources for additional instruction and practice with series.

Key equations

sum of the first n terms of an arithmetic series S n = n ( a 1 + a n ) 2
sum of the first n terms of a geometric series S n = a 1 ( 1 r n ) 1 r r 1
sum of an infinite geometric series with 1 < r <   1 S n = a 1 1 r r 1

Key concepts

  • The sum of the terms in a sequence is called a series.
  • A common notation for series is called summation notation, which uses the Greek letter sigma to represent the sum. See [link] .
  • The sum of the terms in an arithmetic sequence is called an arithmetic series.
  • The sum of the first n terms of an arithmetic series can be found using a formula. See [link] and [link] .
  • The sum of the terms in a geometric sequence is called a geometric series.
  • The sum of the first n terms of a geometric series can be found using a formula. See [link] and [link] .
  • The sum of an infinite series exists if the series is geometric with –1 < r < 1.
  • If the sum of an infinite series exists, it can be found using a formula. See [link] , [link] , and [link] .
  • An annuity is an account into which the investor makes a series of regularly scheduled payments. The value of an annuity can be found using geometric series. See [link] .

Questions & Answers

can I get some pretty basic questions
Ama Reply
In what way does set notation relate to function notation
Ama
is precalculus needed to take caculus
Amara Reply
It depends on what you already know. Just test yourself with some precalculus questions. If you find them easy, you're good to go.
Spiro
the solution doesn't seem right for this problem
Mars Reply
what is the domain of f(x)=x-4/x^2-2x-15 then
Conney Reply
x is different from -5&3
Seid
how to prroved cos⁴x-sin⁴x= cos²x-sin²x are equal
jeric Reply
Don't think that you can.
Elliott
how do you provided cos⁴x-sin⁴x = cos²x-sin²x are equal
jeric Reply
What are the question marks for?
Elliott
Someone should please solve it for me Add 2over ×+3 +y-4 over 5 simplify (×+a)with square root of two -×root 2 all over a multiply 1over ×-y{(×-y)(×+y)} over ×y
Abena Reply
For the first question, I got (3y-2)/15 Second one, I got Root 2 Third one, I got 1/(y to the fourth power) I dont if it's right cause I can barely understand the question.
Is under distribute property, inverse function, algebra and addition and multiplication function; so is a combined question
Abena
find the equation of the line if m=3, and b=-2
Ashley Reply
graph the following linear equation using intercepts method. 2x+y=4
Ashley
how
Wargod
what?
John
ok, one moment
UriEl
how do I post your graph for you?
UriEl
it won't let me send an image?
UriEl
also for the first one... y=mx+b so.... y=3x-2
UriEl
y=mx+b you were already given the 'm' and 'b'. so.. y=3x-2
Tommy
Please were did you get y=mx+b from
Abena
y=mx+b is the formula of a straight line. where m = the slope & b = where the line crosses the y-axis. In this case, being that the "m" and "b", are given, all you have to do is plug them into the formula to complete the equation.
Tommy
thanks Tommy
Nimo
0=3x-2 2=3x x=3/2 then . y=3/2X-2 I think
Given
co ordinates for x x=0,(-2,0) x=1,(1,1) x=2,(2,4)
neil
"7"has an open circle and "10"has a filled in circle who can I have a set builder notation
Fiston Reply
x=-b+_Гb2-(4ac) ______________ 2a
Ahlicia Reply
I've run into this: x = r*cos(angle1 + angle2) Which expands to: x = r(cos(angle1)*cos(angle2) - sin(angle1)*sin(angle2)) The r value confuses me here, because distributing it makes: (r*cos(angle2))(cos(angle1) - (r*sin(angle2))(sin(angle1)) How does this make sense? Why does the r distribute once
Carlos Reply
so good
abdikarin
this is an identity when 2 adding two angles within a cosine. it's called the cosine sum formula. there is also a different formula when cosine has an angle minus another angle it's called the sum and difference formulas and they are under any list of trig identities
Brad
strategies to form the general term
carlmark
consider r(a+b) = ra + rb. The a and b are the trig identity.
Mike
How can you tell what type of parent function a graph is ?
Mary Reply
generally by how the graph looks and understanding what the base parent functions look like and perform on a graph
William
if you have a graphed line, you can have an idea by how the directions of the line turns, i.e. negative, positive, zero
William
y=x will obviously be a straight line with a zero slope
William
y=x^2 will have a parabolic line opening to positive infinity on both sides of the y axis vice versa with y=-x^2 you'll have both ends of the parabolic line pointing downward heading to negative infinity on both sides of the y axis
William
y=x will be a straight line, but it will have a slope of one. Remember, if y=1 then x=1, so for every unit you rise you move over positively one unit. To get a straight line with a slope of 0, set y=1 or any integer.
Aaron
yes, correction on my end, I meant slope of 1 instead of slope of 0
William
what is f(x)=
Karim Reply
I don't understand
Joe
Typically a function 'f' will take 'x' as input, and produce 'y' as output. As 'f(x)=y'. According to Google, "The range of a function is the complete set of all possible resulting values of the dependent variable (y, usually), after we have substituted the domain."
Thomas
Sorry, I don't know where the "Â"s came from. They shouldn't be there. Just ignore them. :-)
Thomas
GREAT ANSWER THOUGH!!!
Darius
Thanks.
Thomas
Â
Thomas
It is the  that should not be there. It doesn't seem to show if encloses in quotation marks. "Â" or 'Â' ... Â
Thomas
Now it shows, go figure?
Thomas
what is this?
unknown Reply
i do not understand anything
unknown
lol...it gets better
Darius
I've been struggling so much through all of this. my final is in four weeks 😭
Tiffany
this book is an excellent resource! have you guys ever looked at the online tutoring? there's one that is called "That Tutor Guy" and he goes over a lot of the concepts
Darius
thank you I have heard of him. I should check him out.
Tiffany
is there any question in particular?
Joe
I have always struggled with math. I get lost really easy, if you have any advice for that, it would help tremendously.
Tiffany
Sure, are you in high school or college?
Darius
Hi, apologies for the delayed response. I'm in college.
Tiffany
how to solve polynomial using a calculator
Ef Reply

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Source:  OpenStax, Precalculus. OpenStax CNX. Jan 19, 2016 Download for free at https://legacy.cnx.org/content/col11667/1.6
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