A total of $78,000 will have been deposited into the account after 25 years, with monthly payments of $260. The APR (annual percentage rate) of the investment is 8.6%.
Step-by-step explanation:
The Excel formula provided, =FV(0.086/12, 12*25,-260), calculates the future value of an investment with consistent periodic payments. In this formula, 0.086/12 represents the monthly interest rate (annual percentage rate APR divided by 12 months), 12*25 is the total number of payments over 25 years, and -260 is the payment amount made each month. To find the total amount deposited into the account, we multiply the monthly deposit by the total number of months:
Total Deposits = Payment per period * Number of periods
Total Deposits = 260 * (12 * 25)
Total Deposits = 260 * 300 = $78,000
So, a total of $78,000 will have been deposited into the account (rounded to the nearest dollar).
For the APR, since the monthly interest rate is 0.086/12, we multiply by 12 to get the annual rate:
APR = Monthly interest rate * 12
APR = (0.086/12) * 12 = 0.086 or 8.6% (expressed as a percentage to the nearest hundredth).