Question

Recently, More Money 4U offered an annuity that pays 4.5% compounded monthly If $1,869 is deposited into this annuity overy month, how much is in the account after 4 years? How much of this is interest?Type the amount in the accounts(Round to the nearest dollar)

Answer 1

Given:

More Money 4U offered an annuity that pays 4.5% compounded monthly

so, the interest rate = r = 4.5% = 0.045, and n = 12

If $1,869 is deposited into this annuity every month

so, the value of P = 1869

we will use the following formula:

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

We will find the value of A after 4 years, t = 4

So, substitute P = 1869, r = 0.045, t = 4, n = 12

`A=(1869\cdot((1+(0.045)/(12))^(12\cdot4)-1))/((0.045)/(12))\approx1869\cdot52.48=98,092.285`

Rounding to the nearest dollar

So, the answer will be the balance of the account = $98,092