Question

do you plan to make monthly deposits of $1000 into an account at the beginning of each month for the next 11 years if you can earn 3.3% interest what will your final balance be at the end of 11 years round to the nearest cent

Answer 1

Ans:- This is the case of the Future Value of annuity due.

FV of an annuity due = P*[(1+r)^n - 1] / r *(1+r), where P is the periodic payment, r is the rate of return, and n is the number of periods

P=$1000, r=3.3%/12, n=12*11=132(since deposit is made every month for 11 years).

=$1000 * [{1+(3.3%/12)}^132 - 1] / (3.3%/12) * [ 1+(3.3%/12) ] = $159,316.84.

Therefore, the Future Value at the end of 11 years will be $159,316.84 (approx).

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