SOLUTION: charlie deposits $500 at the end of each month for the next five years in a credit union account paying 6% compounded monthly. What is the future value of the account at the end of

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Question 1140924: charlie deposits $500 at the end of each month for the next five years in a credit union account paying 6% compounded monthly. What is the future value of the account at the end of five years?
Answer by ikleyn(52803) About Me  (Show Source):
You can put this solution on YOUR website!
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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 (= the number of years multiplied by 12, in this case).


Under the given conditions, P = 500;  r = 0.06/12;  n = 12*5 = 60.  So, according to the formula (1), you get at the end of the 5-th year


    FV = 500%2A%28%28%281%2B0.06%2F12%29%5E%2812%2A5%29-1%29%2F%28%280.06%2F12%29%29%29 = 500%2A%28%28%281%2B0.06%2F12%29%5E60-1%29%2F%28%280.06%2F12%29%29%29 = $34,885.02.

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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.