Mrs.Gerri Atric decides to save money for her retirement.She makes monthly deposits of $150 starting on November 7,2012 and continuing to April 7,2015.If her deposits are earning j₁₂ = 8%,how much money will she have on April 7,2015?

Question

Quizplus · Accepted Answer

We can solve this problem using the formula for the future value of an annuity:

FV = PMT x ((1 + r)^n - 1) / r

Where:

FV = Future Value
PMT = Monthly Deposit
r = Annual Interest Rate / 12 (the interest rate is divided by 12 to get the monthly rate)
n = Number of Months

Using this formula, we can calculate the future value of Mrs. Gerri Atric's deposits:

PMT = $150
r = 8% / 12 = 0.0066667
n = 30 (November 2012 to April 2015 is 30 months)

FV = $150 x ((1 + 0.0066667)^30 - 1) / 0.0066667
FV = $4963.33

Therefore, Mrs. Gerri Atric will have $4963.33 on April 7, 2015. The answer is C.

MrsGerri Atric Decides to Save Money for Her Retirement