Recently, More Money 4U offered an annuity that pays 5.4% compounded monthly. If $2,278 is deposited...

Recently, More Money 4U offered an annuity that pays 5.4% compounded monthly. If $2,278 is deposited into this annuity every month, how much is in the account after 9 years?How much of this is interest?

Expert Solution

P = Monthly Deposit = $2,278

r = monthly interest rate = 5.4%/12 = 0.45%

n = 9*12 = 108 months

Future Worth = P * [(1+r)^n - 1] / r

= $2,278 * [(1+0.45%)^108 - 1] / 0.45%

= $2,278 * 0.624028465 / 0.0045

= $315,897.0764

Therefore, Future worth in 9 years is $315,897.08

jeff jeffy answered 2 years ago

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