Question

What is the future worth of a series of equal end-of-month payments of $2,750 if the series extends over a period of twelve years at 8.4% interest compounded at the given intervals?

Answer 1

The future worth of a series of equal end-of-month payments of $2,750 over a period of twelve years at 8.4% interest compounded monthly is $575,062.32.

Step-by-step explanation:

To calculate the future worth of a series of equal end-of-month payments, we can use the future value of an ordinary annuity formula. The formula is:

FV = PMT * [(1 + r)^n - 1] / r

Where FV is the future value, PMT is the payment amount, r is the interest rate per period, and n is the number of periods.

In this case, the payment amount is $2,750, the interest rate is 8.4% per year (or 0.7% per month), and the number of periods is 12 years (or 144 months).

Plugging in the values into the formula, we get:

FV = 2750 * [(1 + 0.007)^144 - 1] / 0.007 = $575,062.32.