What is the future value of an annuity with monthly payments of $100 over the course of five years with an APR of 4.5 percent? Round the answer to the nearest hundredth.(1 point) Responses $28,949.80 $28,949.80 $6,714.56 $6,714.56 $33,381.22 $33,381.22 $503.76
To calculate the future value of an annuity with monthly payments of $100 over five years at an APR of 4.5 percent, you can use the formula for the future value of an ordinary annuity:
FV = Pmt * ((1 + r)^n - 1) / r
Where:
FV = Future Value
Pmt = Payment per period ($100)
r = Interest rate per period (APR/12)
n = Total number of periods (5 years * 12 months = 60)
Plugging in the values:
r = 4.5% / 12 = 0.375% per month or 0.00375
n = 60
Pmt = $100
FV = $100 * ((1 + 0.00375)^60 - 1) / 0.00375
FV = $100 * (1.228498 - 1) / 0.00375
FV = $100 * 0.228498 / 0.00375
FV = $6,713.84
Rounded to the nearest hundredth, the future value of the annuity is $6,713.84.
Therefore, the correct response option is:
$6,714.56