Question

Matt johnson delivers newspapers and is putting away ​$19 at the end of each month from his paper route collections. matt is 9 years old and will use the money when he goes to college in 9 years. what will be the value of​ matt's account in 9 years with his monthly payments if he is earning 5​% ​(apr), 10.5 % ​(apr), or 14.5 % ​(apr)?

Answer 1

$FV=P({ \frac{ (1+r)^{n} -1}{r} )$

Where, FV = Value in account after 9 years, P = periodic deposits, r=apr, and n=number of times the deposits are made.

In the this case,
P = $19 monthly, r = apr/12, n=9*12=108 months

For APR = 5%,
FV=$19( \frac{ (1+0.05/12)^{108} -1}{0.05/12} ) = 2,584.82$

Fro APR = 10.5%
FV=$19( \frac{ (1+0.105/12)^{108}-1 }{0.105/12} ) = 3,392.34$

For APR = 14.5%
FV=$19( \frac{ (1+0.145/12)^{108}-1 }{0.145/12} ) = 4,180.98$