Question

if you start making $75 monthly contributions today and continue them for four years, what is their future value of the compounding rate is 12 percent APR? What is the present value of this annuity?

Answer 1

Solution:
Given:
Monthly Contribution i.e PMT		$75
Term i.e Nper		4 Years i.e 4*12 = 48 Periods
Compounding Rate		12% i.e 1% Per month (12/12)
Type		1 as payment made at the Beginning of Period
Using The FV Function in excel we will calculate the Future Value:
FV(1%,48,$75,,1)
4637.61253844467
Future Value $4637.61
Using The PV Function in excel we will calculate the Present Value of this annuity :
PV(1%,48,$75,,1)
2876.52743163113
Present Value = $2876.53