Question

Monthly payments of $50 were deposited at the end of each month for five years. The account earned 6.6% compounded monthly. Determine the balance three years after the last deposit.

Answer 1

find monthly rate:

$\frac{6.6}{100}=0.066$

$\frac{0.055}{12}=0.0055$

1.055=(1+1.0055)^n -

increment factor

substitute the monthly rate into the postnumerando annuity formula

this is a postnumerando annuity:

$FV=50(\frac{1.0055^{36}-1}{0.0055})=165.38$