SOLUTION: Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.) $200/month for 14 yr at 14%/year compounded monthly

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Question 1126409: Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.)
$200/month for 14 yr at 14%/year compounded monthly

Answer by ikleyn(52794)   (Show Source): You can put this solution on YOUR website!
.
It is a classic Ordinary Annuity saving plan. The general formula is 


    FV = ,    (1)


where  FV is the future value of the account;  P is your monthly payment (deposit); r is the monthly percentage yield presented as a decimal; 
n is the number of deposits (= the number of years multiplied by 12, in this case).


Under the given conditions, P = 200;  r = 0.14/12;  n = 12*14 = 168.  So, according to the formula (1), you get at the end of the 14-th year


    FV =  =  = $103187.


Note that you deposit only  12*14*$200 = $33600.  The rest is what the account earns/accumulates in 14 years.

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On Ordinary Annuity saving plans,  see the lessons
    - Ordinary Annuity saving plans and geometric progressions
    - Solved problems on Ordinary Annuity saving plans
in this site.


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