Question

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)

Answer 1

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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