The Pirerras are planning to go to Europe 5 years from now and have agreed to...
The Pirerras are planning to go to Europe 5 years from now and have agreed to set aside $120/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 7%/year compounded monthly, how much money will be in their travel fund at the end of the fifth year? (Round your answer to the nearest cent.)
Homework Answers
| Future value of cash flow 5 years from now | = | Monthly cash flow | * | Future value of annuity of 1 | ||||
| = | $ 120.00 | * | 71.5929 | |||||
| = | $ 8,591.15 | |||||||
| Working: | ||||||||
| Future value of annuity of 1 | = | (((1+i)^n)-1)/i | Where, | |||||
| = | 71.592902 | i | = | 7%/12 | = | 0.005833 | ||
| n | = | 5*12 | = | 60 | ||||
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