Question

Matt johnson delivers newspapers and is putting away ​$19 at the end of each month from his paper route collections. matt is 9 years old and will use the money when he goes to college in 9 years. what will be the value of​ matt's account in 9 years with his monthly payments if he is earning 5​% ​(apr), 10.5 % ​(apr), or 14.5 % ​(apr)?

Answer 1

`FV=P({ ( (1+r)^(n) -1)/(r) )`

Where, FV = Value in account after 9 years, P = periodic deposits, r=apr, and n=number of times the deposits are made.

In the this case,
P = $19 monthly, r = apr/12, n=9*12=108 months

For APR = 5%,
FV=
`19( ( (1+0.05/12)^(108) -1)/(0.05/12) ) = $2,584.82`

Fro APR = 10.5%
FV=
`19( ( (1+0.105/12)^(108)-1 )/(0.105/12) ) = $3,392.34`

For APR = 14.5%
FV=
`19( ( (1+0.145/12)^(108)-1 )/(0.145/12) ) = $4,180.98`