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James has set up an ordinary annuity to save for his retirement in 19 years. If his monthly payments are $250 and the annuity has an annual interest rate of 7.5%, what will be the value of the annuity when he retires?

Would the answer be 171.11?

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Anonymous

  1. No. How can the value of the annuity be less than the monthly payment?

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    Ms. Sue

  2. How would I solve the problem the right way then?

    I don't understand how to solve it.

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    Anonymous

  4. Would the answer be 30336.9?

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    Anonymous

  5. No.

    19 * 12 * 250 = $57,000

    That's the amount he's invested. Now multiply that by 1.075 (interest rate) to find the amount of the annuity.

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    Ms. Sue

  6. So, would the answer be 4275?

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    Anonymous

  8. No.

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    Ms. Sue

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