5. If you deposit $1,750 at the end of each month for the next 10 years...

Question

Question

Answer 1

Answer #1

The amount in the account in 16 years

Monthly deposit (P) = $1,750 per month

Monthly Interest rate (r) = 0.466667% per month

Number of period (n) = 192 Months [16 Years x 12 Months]

Future Value of an Ordinary annuity is calculated by using the following Formula

Future Value of an Annuity Due = P x [{(1+ r) ⁿ - 1} / r]

= $1,750 x [{(1 + 0.00466667)¹⁹² – 1} / 0.00466667]

= $1,750 x [(2.444683862 – 1) / 0.00466667]

= $1,750 x [1.444683862 / 0.00466667]

= $1,750 x 309.5751134

= $541,756.45

“Hence, the amount in the account in 16 years will be $541,756.45”

Answer 2

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