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Frederick is saving for a car he is planning to buy in 3 years. He currently does not have any money saved but he has a plan to save $400 each month If Frederick invests the money with a growth rate of 4.5% annually (compounded monthly), how much will he have at the end of 1 year?

Respuesta :

The total amount of money that Fredrick would have at the end of one year is $4901.60.

How much money would he have at the end of one year?

The formula that can be used to determine the future value of the monthly annuity is: amount deposited monthly x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:

  • r = interest rate = 4.5 / 12 = 0.38%
  • n = number of periods  = 12

$400 x{{ (1.0038^12) - 1]/0.0038} = $4901.60

To learn more about annuities, please check: https://brainly.com/question/24108530

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