You want to save $200 a month for the next 20 years and hope to earn an average rate of return of 11 percent

Correct Option is (e.) 1587.

Reason :

Calculation of Future value of Annuity if the payments are made at the end of month :

Future Value of Annuity = Periodic Payment * {[(1+r)^n - 1] / r }

where

r is the rate of interest per period i.e 11% / 12 or 0.91666667% or 0.00916667

n is the number of payments i.e 20 * 12 = 240

Periodic Payment is 200

Future Value = 200 * {[(1+0.00916667)^240 - 1] / 0.00916667 }

= 200 * {[8.935015349 - 1] /0.009166667 }

= 200 * { 7.935015349 / 0.009166667 }

= 200 * 865.6380381

= 173,127.61

Calculation of Future value of Annuity if the payments are made at the beginning of month :

Future Value of Annuity = Periodic Payment * {[(1+r)^n - 1] / r } * (1 + r)

where

r is the rate of interest per period i.e 11% / 12 or 0.91666667% or 0.00916667

n is the number of payments i.e 20 * 12 = 240

Periodic Payment is 200

Future Value = 200 * {[(1+0.00916667)^240 - 1] / 0.00916667 } * (1 + 0.00916667)

= 200 * {[8.935015349 - 1] /0.009166667 } * 1.00916667

= 200 * { 7.935015349 / 0.009166667 } * 1.00916667

= 200 * 865.6380381 * 1.00916667

= 174714.61

Difference or More Money = 174714.61 - 173,127.61

= 1587