Question

Find the accumulated amount of the annuity. (Round your answer to the nearest cent.) $1000 monthly at 4.6% for 20 years.

Answer 1

Accumulated amount will be $2504.90.

Explanation:

Formula that represents the accumulated amount after t years is

A =
`A_(0)(1+(r)/(n))^(nt)`

Where A = Accumulated amount

`A_(0)` = Initial amount

r = rate of interest

n = number of times initial amount compounded in a year

t = duration of investment in years

Now the values given in this question are

`A_(0)` = $1000

n = 12

r = 4.6% = 0.046

t = 20 years

By putting values in the formula

A =
`1000(1+(0.046)/(12))^(240)`

=
`1000(1+0.003833)^(240)`

=
`1000(1.003833)^(240)`

= 1000×2.50488

= 2504.88 ≈ $2504.90

Therefore, accumulated amount will be $2504.90.