value 100 points Problem 625 Calculating Annuity Future Valu

value: 1.00 points Problem 6-25 Calculating Annuity Future Values LoI You are planning to make annual deposits of $3,600 into a retirement account that pays 8 per compounded monthly. How large will your account balance be in 25 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g, 32.16.) Future value ReferenceseBook & Resources Worksheet Diticuty Basic Problem 6-25 Calculating Annuity Future Values(LOI] Learning Objective: 06-01 How to determine the future and present value of nves stments with multiple cash tows your instn ctoria question Sheckim won Oo Type here to search

Solution

EAR = [1 + (i/n)]ⁿ - 1

= [1 + (0.08/12)]¹² - 1 = 1.0067¹² - 1 = 0.083 or 8.3%

FVA = P[(1 + r)ⁿ - 1] / r

= $3,600[(1.083²⁵ - 1)/0.083]

= $3,600[6.34 / 0.083]

= $22,824.63 / 0.083 = $274,997.22