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Leanne Simon made ordinary annuity payments of $91.00 per month for fourteen years earning 8% compounded...

Leanne Simon made ordinary annuity payments of $91.00 per month for fourteen years earning 8% compounded monthly. How much interest is included in the future value of the annuity?

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Answer #1

Information provided:

Monthly payment= $91

Time= 14 years*12= 168 months

Monthly interest rate= 8%/12= 0.6667%

The question is solved by first calculating the future value of ordinary annuity.

Enter the below in a financial calculator to compute the future value of ordinary annuity:

PMT= -91

N= 168

I/Y= 0.6667

Press the CPT key and FV to compute the future value of ordinary annuity.

The value obtained is 28,030.05.

Therefore, the future value of ordinary annuity is $28,030.05.

Interest payment= 0.6667%*$28,030.05

= $186.88.

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