Answer:
a)
$90,280.01
b)
$92,784.19
Explanation:
Use the following formula to calculate the worth of money
Worth of money = Periodic Payment x ( ( ( 1 + Periodic Interest rate )^numbers of periods ) - 1 ) / Periodic Interest rate
a)
Where
Periodic Payment = $1,000 x 12 months per year = $12,000 annually
Periodic interest rate = 9%
Numbers of periods = 6 years
Placing values in the formula
Worth of money = $12,000 x ( ( ( 1 + 9% )^6 ) - 1 ) / 9%
Worth of money = $90,280.01
B)
Where
Periodic Payment = $1,000 x 6 months = $6,000
Periodic interest rate = 9% X 6/12 = 4.5%
Numbers of periods = 6 years x 12/6 = 12
Placing values in the formula
Worth of money = $6,000 x ( ( ( 1 + 4.5% )^12 ) - 1 ) / 4.5%
Worth of money = $92,784.19
