Question

Future value with periodic rates.  Matt Johnson delivers newspapers and is putting away ​$19 at the end of each month from his paper route collections. Matt is 12 years old and will use the money when he goes to college in 6 years. What will be the value of​ Matt's account in 6 years with his monthly payments if he is earning 6.5​% ​(APR), 8.5 % ​(APR), or 14.5 % ​(APR)? What will be the value of​ Matt's account in 6 years with his monthly payments if he is earning 6.5​% ​(APR)?

Can someone explain how to input this into a financial calculator? I have the 10bii its the app.

Answer 1

a). APR = 6.5%

To find the FVA, we need to put the following values in the financial calculator;

INPUT	6*12=72	6.5/12=0.54	0	-19
TVM	N	I/Y	PV	PMT	FV
OUTPUT					1,667.65

Hence, Value of Matt's Account in 6 years = $1,667.65

b). APR = 8.5%

To find the FVA, we need to put the following values in the financial calculator;

INPUT	6*12=72	8.5/12=0.71	0	-19
TVM	N	I/Y	PV	PMT	FV
OUTPUT					1,776.52

Hence, Value of Matt's Account in 6 years = $1,667.65

c). APR = 14.5%

To find the FVA, we need to put the following values in the financial calculator;

INPUT	6*12=72	14.5/12=1.21	0	-19
TVM	N	I/Y	PV	PMT	FV
OUTPUT					2,161.28

Hence, Value of Matt's Account in 6 years = $2,161.28