Question 1188029
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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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<pre>
It is a classic Ordinary Annuity saving plan. The general formula is 


    FV = {{{P*(((1+r)^n-1)/r)}}},    (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 = {{{3000*(((1+0.07/12)^(12*5)-1)/((0.07/12)))}}} = {{{3000*(((1+0.07/12)^60-1)/((0.07/12)))}}} = $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, &nbsp;see the lessons

&nbsp;&nbsp;&nbsp;&nbsp;- <A HREF=http://www.algebra.com/algebra/homework/Sequences-and-series/Ordinary-Annuity-saving-plans-and-geometric-progressions.lesson>Ordinary Annuity saving plans and geometric progressions</A>

&nbsp;&nbsp;&nbsp;&nbsp;- <A HREF=https://www.algebra.com/algebra/homework/Sequences-and-series/Solved-problem-on-Ordinary-Annuity-saving-plans.lesson>Solved problems on Ordinary Annuity saving plans</A>

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