Question

Suppose Becky invests in an annuity that pays 4.3% annual interest, compounded monthly and contributes $225 every month for 20 years. She wants to calculate the value at the end of the 20 years and does so using the following computation:

Answer 1

$85365.90

Explanation:

Let's start by finding the effective rate of interest

.043/12=.00385333

`225*((1+.00385333)^(20*12)-1)/(.00385333)=85365.89513`