You make deposits of $400 at the beginning of every month, into an account paying 8%...

You make deposits of $400 at the beginning of every month, into an account paying 8% interest compounded monthly. The value at the end of 15 years is:

a.136,338

b.137,338

c.138,338

d.139,338

Solutions

Expert Solution

Information provided:

Monthly deposit= $400

Time= 15 years*12= 180 months

Interest arte= 8%/12= 0.67%

The question is concerning finding the future value of an annuity due. Annuity due refers to annuity that occurs at the beginning of a period.

This can also be solved using a financial calculator by inputting the below into the calculator:

The financial calculator is set in the end mode. Annuity due is calculated by setting the calculator to the beginning mode (BGN). To do this, press 2^nd BGN 2^nd SET on the Texas BA II Plus calculator.

The below has to be entered in a financial calculator to compute the future value of the annuity payments:

PMT= 400

N= 180

I/Y= 0.67

Press the CPT key and FV to compute the future value.

The value obtained is 139,338.06.

Therefore, the future value at the end of 15 years is $139,338.

Hence, the answer is option d.

In case of any query, kindly comment on the solution.

jeff jeffy answered 9 months ago

Next > < Previous

Related Solutions

You plan to make monthly deposits of $1,000 into an account at the beginning of each...

You plan to make monthly deposits of $1,000 into an account at the beginning of each month for the next 12 years. If you can earn 3.0% interest, what will your final balance be by the end of 12 years? Round to the nearest cent. [Hint: Beginning of period monthly cash flows!]

You plan to make monthly deposits of $1,000 into an account at the beginning of each...

You plan to make monthly deposits of $1,000 into an account at the beginning of each month for the next 11 years. If you can earn 3.4% interest, what will your final balance be by the end of 11 years? Round to the nearest cent. [Hint: Beginning of period monthly cash flows!]

You deposit $1000 per month every month into an investment account for 40 years. The deposits...

You deposit $1000 per month every month into an investment account for 40 years. The deposits are made at the end of each month . The first deposit is made at the end of the first month. If the return 6 percent compounded monthly for the first 10 years, and 9 percent compounded monthly thereafter, how much will you have in the account in year 40?

You make deposits at the end of each month into an account earning interest at a...

You make deposits at the end of each month into an account earning interest at a rate of 6%/year compounded monthly. Your deposits will be $2000/month in the first year, $2200/month in the second year, $2420/month in the third year, $2662 in the fourth year, and so on. How much will be in your account at the end of 40 years? No Excel answers please.

You are planning to make monthly deposits of $170 into a retirement account that pays 8...

You are planning to make monthly deposits of $170 into a retirement account that pays 8 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 21 years?

You deposit $500 at the beginning of each month into your saving account every month. After...

You deposit $500 at the beginning of each month into your saving account every month. After five years (60 deposits total), your account value is $50,000. Assuming monthly compounding, what is your monthly rate that the bank provides? a. 1.22% b. 1.14 c. 1.43% d. 1.57%

3. If you deposit $1,600 in an account paying 8% today and deposit $1,600 every year into...

3. If you deposit $1,600 in an account paying 8% today and deposit $1,600 every year into the account, how much will you have in 4 years? 4. The average price for a new car today is $29,000. If the rate of inflation is expected to be 3.5% annually, what will a new car cost in 7 years? 5. You bought a stock 7 years ago for $45. Today, the stock is selling for $79. If you sell today, what rate of return have you earned...

Candice deposits into her savings account at the end of every month. During the first year,...

Candice deposits into her savings account at the end of every month. During the first year, she deposits 10 each month. During the second year, Candice deposits 20 each month. During the third year, the deposits are 30. The pattern continues, concluding with deposits of 160 per month during the 16th year. Candice earns an annual nominal interest rate of 12% compounded monthly. How much will Candice have accumulated after 16 years?

3. If you decide to do your deposits at the end of every month (similarly to...

3. If you decide to do your deposits at the end of every month (similarly to ex.1, so your first deposit will be in one month from today) in a bank account that offers a 5% interest rate compounded monthly, and the deposits will increase in a 0.25% month after month, and you keep on doing so for the next 30 years: a) Draw the timeline (at least the first five periods) with its corresponding numeration of periods and cashflows...

You plan to make 15 deposits at the end of each year in an account that...

You plan to make 15 deposits at the end of each year in an account that pays 6% compound interest annually. If the first deposit is $ 1,000 and subsequently 500 are added each year to the amount deposited the previous year (1000, 1500, ...), the amount of the account at the end of the 15 years will be close to: a. $71,550 b. $97,777 c. $92,242 d. $87,021 e.No correct answer is provided.

Subjects