Good evening,
may I ask you for help to resolve following task:
An equal payments of $200 is deposited in an account every month for 6 years. Interest is 15% p.a which is Compounded every month. What will be the balance after 6 years?
Thank you in advance.
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Interest
10y ago#1The interest is 15 / 12 = 1.25% per month, and 6 years is 72 months.
The most efficient way is to calculate the present value of the payments by multiplying 200 by the annuity factor for 72 periods at 1.25% per period.
Then getting the terminal amount at the end of 6 years by multiplying the present value by (1.0125)^72
You ill need to use the formula to get the annuity factor because it is not in the tables.
I don't know where you found this question, but I really cannot see it being asked in the real exam :-)
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