1. A savings account in which people make regular payment amounts to save toward future goals
like college or retirement is called an annuity. In the formula below, P is the regular payment
amount, n is the number of times that interest is compounded per year (which is also the
number of payments made per year), r is the annual interest rate, A is the future value of the
annuity, and it is the number of years:
A(t) =
P[(1 + 7)™ − 1]
-
T
n
Megan opens a savings account to pay for her new baby's college education. She deposits $200
every month into the account at an annual interest rate of 4.2% compounded monthly.
c) What is the rate of change in the value of Megan's account after 8 years? (10 pts)