Engineering Economics Series (Ordinary Annuity) - Part 1

Learn how to solve ordinary annuity problems and the calculator technique in solving them. The problems I discussed in this video are the following: Problem No. 1 Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the bank pays 8% per year, compounded annually, how much money will accumulate by the end of the 12-year period? Problem No. 2 An engineer who is planning his retirement has decided that he will have to withdraw $10 000 from his savings account at the end of each year. How much money must the engineer have in the bank at the start of his retirement, if his money earns 6% per year, compounded annually, and he is planning a 12-year retirement (i.e., 12 annual withdrawals)? Problem No. 3 Mr. Franklin wants to save for a new sports car that he expects will cost $38 000 four and one-half years from now. How much money will he have to save each year and deposit in a savings account that pays 6¼% per year, compounded annually, to buy the car in four and one-half years?