Which Annuity Formula to Use for Birthday Deposits?

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To calculate the total amount in the savings account on the daughter's twenty-first birthday, the annuity due formula should be used, as the father makes deposits at the beginning of each compounding period. Each annual deposit of $1000 will earn interest for a different number of years, with the first deposit earning interest for 21 years and the last for just one year. The account earns 9.5% interest compounded annually, which must be applied to each deposit accordingly. The total amount is found by calculating the future value of each deposit and summing them up. Using the annuity due formula will yield the correct total for the account balance at the end of the twenty-first year.
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A father opened a savings account for his daughter on the day she was born, depositing $1000. Each year on her birthday he deposits another $1000, making the last deposit on her twenty-first birthday. If the account pays 9.5% interest compounded annually, how much is in the account at the end of the day on the daughter's twenty first birthday?

For this question, which formula do i use?
ordinary annuity: where payments are made at end of time period
or
annuities due: where payments are made at beginning of time period
?
 
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You use the simple equation for compound interest and apply it to each deposit made over the course of 21 years --- and then add them all up. :)
 
but this section is about annuity...ordinary annuity and annuities due are the two equations. Out of these two, which one should i use?
 
Tell us how your textbook defines those terms! :)
 
ordinary annuities: those with payments made at the end of each time period.

annuities due: annuities in which payments are made at the beginning of each time period.
 
Good. And the father is making payments at the beginning of each compounding period ... therefore ...? :)
 
okay...so i use the annuity due formula...
thx.
 
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