Find the future value of an annuity with monthly deposits of $75, made over a period of five years, with 9.8% interest compounded monthly.
A) $5777.18
B) $7984.39
C) $7706.18
D) $8254.28

Question

Quizplus · Accepted Answer

The future value of an annuity can be calculated using the formula:FV = P * (((1 + r/n)^(n*t)) - 1) / (r/n))where:P is the monthly depositr is the annual interest raten is the number of times per year that the interest is compoundedt is the number of yearsIn this case, we have:P = $75r = 9.8% = 0.098n = 12 (since the interest is compounded monthly)t = 5Plugging these values into the formula, we get:FV = 75 * (((1 + 0.098/12)^(12*5)) - 1) / (0.098/12))= 75 * (((1.008167)^60) - 1) / (0.008167))= 75 * (1.5638 - 1) / 0.008167= 75 * 0.5638 / 0.008167= $5777.18Therefore, the future value of the annuity is $5777.18.

Find the Future Value of an Annuity with Monthly Deposits