In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period

Finance Dec 09, 2020

In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

Find the accumulated amount of the annuity. (Round your answer to the nearest cent.)

$1000 monthly at 6.4% for 20 years.

Expert Solution

Since the payment frequency is monthly , interest is also compounded monthly

Monthly rate = 6.4%/12 = 0.005333

No of payments = 20* 12 = 240

Accumulated value

= Future value of annuity

=1000/0.005333*(1.053333^240-1)

=$484580.15

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