Question

You make $5,100 annual deposits into a retirement account that pays an APR of 10.6 percent compounded monthly.

How large will your account balance be in 31 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Account balance in 31 years            $

Answer 1

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

Effective Annual Rate = ((1+10.6/12*100)^12-1)*100

Effective Annual Rate% = 11.13

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 5100*(((1+ 11.13/100)^31-1)/(11.13/100))

FV = 1161562.84