SOLUTION: Cardo invests $6,000 at the end of each month for 10 months. The annual interest rate Cardo gets is 12% compounded monthly. What is the final value of Cardo's investment at the end

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Question 1126544: Cardo invests $6,000 at the end of each month for 10 months. The annual interest rate Cardo gets is 12% compounded monthly. What is the final value of Cardo's investment at the end of the 10th month on this annuity?
Answer by ikleyn(52800) About Me  (Show Source):
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It is a classic Ordinary Annuity saving plan. The general formula is 


    FV = P%2A%28%28%281%2Br%29%5En-1%29%2Fr%29,    (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 (10, in this case).


Under the given conditions, P = 6000;  r = 0.12/12;  n = 10.  So, according to the formula (1), you get at the end of the 10-th month


    FV = 6000%2A%28%28%281%2B0.12%2F12%29%5E10-1%29%2F%28%280.12%2F12%29%29%29 = 6000%2A%28%28%281%2B0.01%29%5E10-1%29%2F0.01%29 = $62773.28.


Note that Cardo deposits only  10*$6000 = $60,000.  The rest is what the account earns/accumulates in 10 months.

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On Ordinary Annuity saving plans,  see the lessons
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