Investment opportunity, save or pay $500 every month, you will earn 8% per year of interest rate. How much you will get at the end of year tenth? Hint: Annuity (Excel)
Monthly payment |
500 |
Interest rate |
8% |
Monthly rate |
0.67% |
No. of years |
10 |
No. of periods |
120 |
Future value of annuity = Monthly payment x FV annuity factor |
Future value of annuity = Monthly payment x (((1+monthly rate)^no. of periods -1)/monthly rate) |
Future value of annuity = 500 x (((1+0.67%)^120 -1)/0.67%) |
Future value of annuity = 500 x 182.9460 |
Future value of annuity = $ 91,473 ---> Amount at the end of year Tenth. |
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