Question

d-1 points TanFin12 5.2.006 Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.) $650/month for 16 years at 8%/year compounded monthly Need Help? RaitWateh t Watch It

Answer 1

Monthly Payment = $650
Annual Interest Rate = 8%
Monthly Interest Rate = 8%/12
Monthly Interest Rate = 0.667%
Period of Annuity = 16 years or 192 months

Future Value of Annuity = $650*1.00667^191 + $650*1.00667^190 + $650*1.00667^189 + ... + $650*1.00667 + $650
Future Value of Annuity = $650 * (1.00667^192 - 1) / 0.00667
Future Value of Annuity = $650 * 387.35712
Future Value of Annuity = $251,782.13

So, future value of this ordinary annuity is $251,782.13