Use a calculator to evaluate an ordinary annuity formula
A = m [ 1+ r over n ^nt -1] than rn is under--____________________
r over n
for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.)
$150; 6%; 40 yr
A = $
To evaluate the ordinary annuity formula, you need to substitute the given values for m, r, and t into the formula and calculate the result using a calculator. Here's how you can do it step by step:
1. Substitute the given values into the formula:
m = $150 (monthly payment)
r = 6% (annual interest rate)
t = 40 years
2. Convert the annual interest rate to a monthly rate:
Since the payments are made monthly, we need to convert the annual interest rate of 6% to a monthly rate. Divide the annual rate by 12:
Monthly interest rate (rn) = 6% / 12 = 0.005
3. Plug the values into the formula:
A = $150 * [1 + (0.005 / 12)] ^ (12 * 40) - 1
4. Simplify the formula:
Calculate the exponent first:
(12 * 40) = 480
Then calculate the inside of the square brackets:
(0.005 / 12) = 0.00041666667
Add 1 to the value inside the square brackets and raise it to the power of 480:
[1 + 0.00041666667] ^ 480
Subtract 1 from the result and multiply by the monthly payment:
$150 * ([1 + 0.00041666667] ^ 480 - 1)
5. Evaluate the expression using a calculator:
Enter the expression into a calculator (or use a calculator app on your computer or smartphone) and perform the calculations. Round the final result to the nearest cent.
The calculator should give you the value of A, which represents the future value of the ordinary annuity.
Note: The actual calculation can vary depending on the calculator or software you are using, so make sure to follow the proper order of operations and use the correct syntax for exponentiation.