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Determine the accumulated value of an annuity of $50 a month for 25 years if interest...

Determine the accumulated value of an annuity of $50 a month for 25 years if interest is a) 8% compounded monthly, b) j12 = 3%.

Expert Solution

$50 a month for 25 years

a) r = 8%/12 = 0.006666666667 per month

PMT = 50

n = 25 * 12 = 300 monthly payments

Accumulated value, FV

The accumulated value at the end of 25 years is $47,551.31973375

b) j12 = 3%

r = 3%/12 = 0.0025

n = 300

PMT = 50

The accumulated value is $22,300.391154

jeff jeffy answered 2 years ago

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