The balance in the account eight years after the last deposit is $24,676.68
What is an ordinary annuity?
Ordinary annuity means a fixed amount that would be paid over a period of time, with payments being made at the end of each period.
Like in this scenario, the $900 would be deposited every six months into the Reed Bank account for 7 years, in essence, our first task is to determine the balance in the account at the time of the last deposit in 7 years using the future value formula of an ordinary annuity as shown below:
FV=annuity payment*(1+r)^N-1/r
annuity payment=$900
r=semiannual interest rate=6%/2=0.03
N=number of semiannual payments in 7 years=7*2=14
FV=$900*(1+0.03)^14-1/0.03
FV=$900*(1.03)^14-1/0.03
FV=$900*(1.51258972485511-1)/0.03
FV=$900*0.51258972485511/0.03
FV=$15,377.69
The balance in the account eight years after the last deposit can be computed using the future value formula of single cash of $15,377.69
FV=PV*(1+r)^N
PV=balance at the time of the last deposit=$15,377.69
r=semiannual interest rate=6%/2=0.03
N=number of semiannual periods in 8 years=8*2=16
FV=$15,377.69*(1+0.03)^16
FV=$24,676.68
Find out more about the future value of an ordinary annuity on:https://brainly.com/question/5303391
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