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Future value with periodic rates. Matt Johnson delivers newspapers and is putting away ​$18 at the end of each month from his paper route collections. Matt is 12 years old and will use the money when he goes to college in 6 years. What will be the value of​ Matt's account in 6 years with his monthly payments if he is earning 6​% ​(APR), 8 % ​(APR), or 14 % ​(APR)? What will be the value of​ Matt's account in 6 years with his monthly payments if he is earning 6​% ​(APR)?

Respuesta :

Answer:

$1,555.36

$1656.48

$2013.57

Explanation:

The formula for calculating future value = A (B / r)

B = [(1 + r)^ nm] - 1

FV = Future value  

P = Present value  

R =Monthly interest rate interest rate  

N = number of years  

1. 6% APR

$18[ (1 + 0.005)^72 - 1] / 0.005 = $1,555.36

2. 8% APR

$18[ (1 + 0,006667)^72 - 1] / 0.00667 = $1656.48

3.  14% APR

$18[ (1 + 0.011667)^72 - 1] / 0.011667= $2013.57