At the end of each month you deposit $250 into an account which earns an annual percentage rate of 6% compounded monthly. How much money will you have in the account after 40 years? Give your answer as a decimal rounded to the nearest hundredth.
A) $120000.00
B) $315473.28
C) $497872.68
D) $589545.27
E) None of the above.

Question

At the end of each month you deposit $250 into an account which earns an annual percentage rate of 6% compounded monthly. How much money will you have in the account after 40 years? Give your answer as a decimal rounded to the nearest hundredth. 
A) $120000.00
B) $315473.28
C) $497872.68
D) $589545.27
E) None of the above.

Quizplus · Accepted Answer

The future value of a series of monthly deposits can be calculated using the future value of an annuity formula: FV = P * [((1 + r)^nt - 1) / r], where P is the monthly deposit, r is the monthly interest rate, n is the number of times the interest is compounded per year, and t is the number of years. Here, P = $250, r = 0.06/12, n = 12, and t = 40. Plugging in these values gives approximately $497872.68.

At the End of Each Month You Deposit $250 into an Account