Question

If you start making $140 monthly contributions today and continue them for five years, what’s their...

If you start making $140 monthly contributions today and continue them for five years, what’s their future value if the compounding rate is 9.00 percent APR? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value annuity =

What is the present value of this annuity? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Present Value Annuity=

Homework Answers

Answer #1

Monthly contribution = $140
Annual interest rate = 9.00%
Monthly interest rate = 0.75%
Period = 5 years or 60 months

Future value of annuity = $140*1.0075^59 + $140*1.0075^58 + ... + $140*1.0075 + $140
Future value of annuity = $140 * (1.0075^60 - 1) / 0.0075
Future value of annuity = $140 * 75.424137
Future value of annuity = $10,559.38

Present value of annuity = $140/1.0075 + $140/1.0075^2 + ... + $140/1.0075^59 + $140/1.0075^60
Present value of annuity = $140 * (1 - (1/1.0075)^60) / 0.0075
Present value of annuity = $140 * 48.173374
Present value of annuity = $6,744.27

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