A phone plan costs $180 a month. At 7.2 APR with monthlycompounding, what is the...

A phone plan costs $180 a month. At 7.2 APR with monthly compounding, what is the future value of these saving in 40 Years.

219,265

319,722

333,233

211,441

317,668

Expert Solution

We know that,

Future Value = Amount *(1+ monthly rate)^(end year - current year) + Amount *(1+ monthly rate)^(end year - current year) +Amount *(1+ monthly rate)^(end year - current year) +Amount *(1+ monthly rate)^(end year - current year) +Amount *(1+ monthly rate)^(end year - current year) +............ + Amount *(1+ monthly rate)^(end year - current year)

Monthly Rate = 0.6%

Amount = 180

Number of payments = 12*40 = 480

Future Value = 180 * { (1+ 0.006)^(480-1) + (1+ 0.006)^(480-2) + (1+ 0.006)^(480-3)+ (1+ 0.006)^(480-4)+(1+ 0.006)^(480-5)+(1+ 0.006)^(480-6)+ ........... (1+ 0.006)^(480-480)

Future Value = 499848.86 Answer

jeff jeffy answered 2 years ago

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