Question

John Doe  plans to save $300 per month starting today for the next 39 years "just to...

John Doe  plans to save $300 per month starting today for the next 39 years "just to start the month off right." John feels that he can earn an interest rate of 10.4 percent compounded monthly. How much will there be in the account 39 years from today?

Multiple Choice

  • $1,946,273.61

  • $1,767,881.66

  • $1,929,550.84

  • $1,606,212.48

  • $1,773,258.58

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Homework Answers

Answer #1

We can use the future value of annuity due  formula to find the answer:

Where,
FVA = Future Value of Annuity
A = Annuity or monthly payment
i = rate of interest
n = number of years
a = number of payments in a year

.

If you want to do it in excel refer the following:

Monthly payment 300
Number of years 39
Interest rate 10.40%
Future value $1,946,273.61

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