SOLUTION: Suppose Jorge Otero has set up an annuity due with a certain credit union. At the beginning of each month, $130 is electronically debited from his checking account and placed into

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Question 1172705: Suppose Jorge Otero has set up an annuity due with a certain credit union. At the beginning of each month, $130 is electronically debited from his checking account and placed into a savings account earning 6% interest compounded monthly. What is the value (in $) of Jorge's account after 17 months? (Round your answer to the nearest cent.)
I got the answer 46149.6
I put my numbers in this formula FV (annuity due) payment x (1+i)^n-1/i x (1+i)


Answer by math_helper(2461)   (Show Source): You can put this solution on YOUR website!


If you get in the habit of sanity checking your answers, you will immediately see that number is way too large.  $130*17 = $2210 invested.   Even if the entire $2210 is invested for 17months at 6% annual rate of return, it will only grow to approx $2405.56 if compounded monthly.  So the answer definitely has to be LESS than this amount.  



If you had shown what numbers you used, I'd be able to tell you exactly where the problem is.  In all likelihood, you used 17 periods, when in fact there are only 17/12 = 1.416667  periods (years).



---- 

I get a number closer to  $2312.16



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Added 1/12/21:   What I was getting at is you didn't show us tutors what values you used for 'n' or 'i' in the formula.  We know you plugged "something" into the formula.  When compounding comes into play, often n needs to be adjusted or i needs to be adjusted:



    



      n = # of compounding periods = 17

      i = rate per compounding period = 6%/12 = 0.06/12 = 0.005    <<< maybe you missed this step



      

     = 

     = 

     = 





Here is a spreadsheet that shows the month-by-month change in value:









 

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