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Calculate the future value
Princial - P3,000
Interest rate - 7%
Made of payment - monthly
Length of annuity - 5 years
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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 = 3000; r = 0.07/12; n = 12*5 = 60. So, according to the formula (1), you get at the end of the 5-th year
FV = = = $214.778.70.
Note that you deposit only 12*5*$3000 = $180,000. The rest is what the account earns/accumulates in 5 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.
The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.
When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.