You have decided to place $619 in equal deposits every month at the beginning of the month into a savings account earning 4

Accounting Feb 03, 2021

You have decided to place $619 in equal deposits every month at the beginning of the month into a savings account earning 4.74 percent per year, compounded monthly for the next 9 years. The first deposit is made today. How much money will be in the account at the end of that time period? Round the answer to two decimal places. Show working & formula.

Expert Solution

Computation of Future Value using FV Function in Excel:

=-fv(rate,nper,pmt,pv,type)

Here,

FV = Future Value = ?

Rate = 4.74%/12 = 0.395% compounded monthly

Nper = 9 years * 12 months = 108 months

PMT = $619

PV = 0

Type = 1 (at the beginning)

Substituting the values in formula:

=-fv(0.395%,108,619,0,1)

FV or Future Value = $83,502.21

So, $83,502.21 will be in the account at the end of that time period.

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