If you start making 25 monthly contributions TODAY and conti

If you start making $25 monthly contributions TODAY and continue them for 4 years, what\'s their present value if monthly rate is 0.5% ?

Solution

P = Payment = $25; r = 0.5% ; n = 48 months =48

Present value of annuity = P + P*((1-(1+r)^-(n-1))/r)

Present value of annuity = 25 + 25*((1-(1+0.5%)^-(48-1))/0.5%)

Present value of annuity = $1,069.83