Question

You make deposits of $400 at the beginning of every month, into a account paying 8% interest compounded monthly. The value at the end of 15 years is:

Answer 1

Information provided:

Monthly deposit= $400

Time= 15 years*12= 180 months

Interest arte= 8%/12= 0.67%

The question is concerning finding the future value of an annuity due. Annuity due refers to annuity that occurs at the beginning of a period.

This can also be solved using a financial calculator by inputting the below into the calculator:

The financial calculator is set in the end mode. Annuity due is calculated by setting the calculator to the beginning mode (BGN). To do this, press 2^nd BGN 2^nd SET on the Texas BA II Plus calculator.

The below has to be entered in a financial calculator to compute the future value of the deposits.

PMT= 400

N= 180

I/Y= 0.67

Press the CPT key and FV to compute the future value.

The value obtained is 139,338.06.

Therefore, the value at the end of 15 years is $139,338.

In case of any query, kindly comment on the solution.