Question

In order to accumulate enough money for a down payment on a house, a couple deposits $513 per month into an account paying 6% compounded monthly. Ifpayments are made at the end of each period, how much money will be in the account in 3 years?Type the amount in the account: $(Round to the nearest dollar)

Answer 1

Step 1- Write out the Future Value Ordinary Annuity formula:

`FV=C*((1+r)^n-1)/(r)`

Where,

`\begin{gathered} FV=\text{ the future value} \\ C=\text{monthly payments} \\ r=\text{ the interest rate} \\ n=\text{ the number of payments} \end{gathered}`

Step 2- Write out the given values and substitute them into the formula:

`\begin{gathered} C=\$513,r=0.06, \\ n=3*12=36 \end{gathered}`

Substituting the given values into the formula, we have:

`FV=513*((1+0.06)^(36)-1)/(0.06)`

Hence,

`FV=513*((1.06)^(36)-1)/(0.06)`

Hence, the future value is approximately:

`FV\approx\$61109.00`

Hence, the amount in the account in 3 years is:

$61109.00