Bob has saved 560 each month for the last 4 years to make a

Bob has saved $560 each month for the last 4 years to make a down payment on a house. The account earned an interest rate of .39 percent per month. How much money is in Bob\'s account?

$26,880.00

$28,215.06

$28,826.54

$28,480.41

$29,497.56

Solution

Answer is Option - $ 29497.56

Future value of annuity = Deposit amount * {(1+r) ^ t – 1} / r

r = Interest rate = 0.0039

t = period = 4 years * 12 months = 48

Deposit amount = 560

= 560 * {(1+0.0039) ^ 48 – 1} / 0.0039

= 560*{1.205429-1}/0.0039

= 29497.56