document.write( "Question 1178883: To save for the replacement of a computer, a business deposits $250 at the end of each month into an account that earns 7% annual interest compounded monthly. Find the future value of the ordinary annuity in 4 years. (Round you answer to the nearest cent.) \n" ); document.write( "
Algebra.Com's Answer #808333 by ikleyn(52788)\"\" \"About 
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\n" ); document.write( "To save for the replacement of a computer, a business deposits $250 at the end of each month into an account
\n" ); document.write( "that earns 7% annual interest compounded monthly. Find the future value of the ordinary annuity in 4 years.
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document.write( "It is a classic Ordinary Annuity saving plan. The general formula is \r\n" );
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document.write( "    FV = \"P%2A%28%28%281%2Br%29%5En-1%29%2Fr%29\",    (1)\r\n" );
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document.write( "where  FV is the future value of the account;  P is the monthly payment (deposit); r is the monthly percentage yield presented as a decimal; \r\n" );
document.write( "n is the number of deposits (= the number of years multiplied by 12, in this case).\r\n" );
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document.write( "Under the given conditions, P = 250;  r = 0.07/12;  n = 12*4 = 48.  So, according to the formula (1), you get at the end of the 20-th year\r\n" );
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document.write( "    FV = \"250%2A%28%28%281%2B0.07%2F12%29%5E%2812%2A4%29-1%29%2F%28%280.07%2F12%29%29%29\" = \"250%2A%28%28%281%2B0.07%2F12%29%5E48-1%29%2F%28%280.07%2F12%29%29%29\" = $13,802.31.\r\n" );
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document.write( "Note that you deposit only  12*4*$250 = $12,000.  The rest is the interest that the account earns/accumulates in 4 years.\r\n" );
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\n" ); document.write( "\n" ); document.write( "On Ordinary Annuity saving plans,  see the lessons\r
\n" ); document.write( "\n" ); document.write( "    - Ordinary Annuity saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( "    - Solved problems on Ordinary Annuity saving plans\r
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\n" ); document.write( "\n" ); document.write( "The lessons contain  EVERYTHING  you need to know about this subject,  in clear and compact form.\r
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\n" ); document.write( "\n" ); document.write( "When you learn from these lessons,  you will be able to do similar calculations in semi-automatic mode.\r
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