Calculate the future value of an annuity of $200 per month for 4 years at 12% interest compounded monthly
amount = 200( 1.01^48 - 1)/.01
= ....
To calculate the future value of an annuity, we can use the formula for the future value of a series of regular payments, also known as the future value of an ordinary annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV is the future value of the annuity or the total amount accumulated at the end of the annuity term.
P is the periodic payment (in this case, $200 per month).
r is the interest rate per period (in this case, 12% per year, or 1% per month).
n is the number of compounding periods (in this case, 4 years or 48 months).
Now, let's substitute the values into the formula and calculate the future value.
FV = $200 * [(1 + 0.01)^48 - 1] / 0.01
Calculating this expression yields:
FV = $200 * [1.01^48 - 1] / 0.01
FV = $200 * [2.2080402071 - 1] / 0.01
FV = $200 * [1.2080402071] / 0.01
FV = $2416.08
Therefore, the future value of an annuity with payments of $200 per month for 4 years at a 12% interest compounded monthly will be approximately $2416.08.