Question

Find the accumulated amount of the annuity. (Round your answer to the nearest cent.) $1000 monthly at 4.6% for 20 years.

Answer 1

Answer:

Accumulated amount will be $2504.90.

Step-by-step explanation:

Formula that represents the accumulated amount after t years is

A = $A_{0}(1+\frac{r}{n})^{nt}$

Where A = Accumulated amount

$A_{0}$ = Initial amount

r = rate of interest

n = number of times initial amount compounded in a year

t = duration of investment in years

Now the values given in this question are

$A_{0}$ = $1000

n = 12

r = 4.6% = 0.046

t = 20 years

By putting values in the formula

A = $1000(1+\frac{0.046}{12})^{240}$

  = $1000(1+0.003833)^{240}$

  = $1000(1.003833)^{240}$

  = 1000×2.50488

  = 2504.88 ≈ $2504.90

Therefore, accumulated amount will be $2504.90.