Question

Lauren plans to deposit $5000 into a bank account at the beginning of next month and $250/month into the same account at the end of that month and at the end of each subsequent month for the next 3 yr. If her bank pays interest at a rate of 5%/year compounded monthly, how much will Lauren have in her account at the end of 3 yr? (Assume she makes no withdrawals during the 3-yr period.  Round your answer to the nearest cent.)

Answer 1

To compute the amount in laurens account at the end of year 3,

first , calculate the amount if 5000$ is invested @5% compounded monthly.

secondly, calculate the annuity if 250$ is invested monthly for a period of 3 years.