Question

Johan also decides that he wants to save for his retirement. He opens an investment account, earning 11% per annum compounded monthly.He decides to deposit R600 monthly for 40 years. What is the value of his investment at the end of the 40 year period

Answer 1

this is an annuity

we solve by the formula

$FV=A\times\frac{(1+r)^n-1}{r}$

$r=\frac{0.11}{12}=0.0092$

$n=40\times12=480$

$FV=600\times\frac{(1+0.009)^{480}-1}{0.009}=5 160 076.32$