Question

Yolanda opened a retirement account earning 5.5% interest per year, compounded monthly. She deposited $100 each month. Assume that no other deposits or withdrawals were made. Answer the following, writing your answers to the nearest dollar.

Answer 1

The balance in dollars and cents in Yolanda's account at the end of 4 years is $5,355.29

What is the future value of an ordinary?

An ordinary annuity is the one where the monthly deposit occurs at the end of each month rather than at the beginning of the months such its future value based on 5.5% annual interest rate can be determined thus:

FV=PMT*(1+r)^N-1/r

FV=balance in dollars and cents in Yolanda's account at the end of 4 years=unknown

PMT=monthly deposit=$100

r=monthly interest rate=5.5%/12=0.00458333333333333

N=number of monthly deposits in 4 years=4*12=48

FV=$100*(1+0.00458333333333333)^48-1/0.00458333333333333

FV=$5,355.29

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Missing question:

What was the balance in dollars and cents in Yolanda's account at the end of 4 years?