Question

Find the amount accumulated FV in the given annuity account. HINT [See Quick Example 1 and Example 1.] (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest ten dollars.) $300 deposited monthly for 16 years at 5% per year

Answer 1

$670

Explanation:

Given that $300 is deposited monthly for 16 years at 5% per year

Applying the compound interest formula;

A=P(1+r/n)^nt

where

A= amount in account after time t

P=starting amount=$300

r=interest rate= 5%

n=number of compoundings per year= 12

t=time in years=16

`A=P(1+(r)/(n) )^(nt) \\\\A=300(1+(0.05)/(12) )^(12*16) \\\\\\A=300(1+0.004167)^(192) \\\\\\A=300(1.004167)^(192) \\\\\\A=666.60\\\\\\A=670`