Question

You are planning to make monthly deposits of $475 into a retirement account with an APR of 10 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be just after three months. Round your answer to the nearest dollar.

Then using the same numbers calculate what it will be after just 2 months

Answer 1

a.	Retirement account after 3 months	=	Monthly Deposit	*	Future value of annuiyty of 1
		=	$           475	*	3.025069
		=	$       1,437
	Working:
	Future value of annuity of 1	=	(((1+i)^n)-1)/i		Where,
		=	3.0250694		i	=	10%/12	=	0.008333
					n			=	3
b.	Retirement account after 5 months	=	Monthly Deposit	*	Future value of annuiyty of 1
		=	$           475	*	5.084031
		=	$       2,415
	Working:
	Future value of annuity of 1	=	(((1+i)^n)-1)/i		Where,
		=	5.0840307		i	=	10%/12	=	0.008333
					n			=	5