Question

You have decided to place $361 in equal deposits every month at the beginning of the month into a savings account earning 4.63 percent per year, compounded monthly for the next 5 years. The first deposit is made today. How much money will be in the account at the end of that time period? Round the answer to two decimal places.

Answer 1

Future Value of an Annuity Due
= C*[(1+i)^n-1]/i] * (1+i)
Where,
c= Cash Flow per period
i = interest rate per period =4.63%/12 =0.385833333%
n=number of period =5*12=60
= $361[ (1+0.00385833333)^60 -1 /0.00385833333] * (1 +0.00385833333)
= $361[ (1.00385833333)^60 -1 /0.00385833333] * 1.00385833333
= $361[ (1.2599 -1 /0.00385833333] * 1.00385833333
= $24,413.66