If you invest $8,717.24 at the end of every month for the next 8 years, what...

If you invest $8,717.24 at the end of every month for the next 8 years, what will be you account balance immediately after the last payment is deposited? The interest rate you will earn on the account is 15.75%

Solutions

Expert Solution

Future Value of an Ordinary Annuity
= C*[(1+i)^n-1]/i

Where,
C= Cash Flow per period
i = interest rate per period =15.75%/12 =1.3125%
n=number of period =12*8 =96

= $8717.24[ (1+0.013125)^96 -1] /0.013125

= $8717.24[ (1.013125)^96 -1] /0.013125

= $8717.24[ (3.4966 -1] /0.013125]

= $16,58,195.96

jeff jeffy answered 1 year ago

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