Mr A deposited $700 at the end of each month of calendar year 2010 in an investment account of 9% annual interest rate. Calculate the future value of the annuity on Dec 31, 2011. Compounding is done on monthly basis.
FV=P{[1 + R]^N - 1/ R
FV=700{[1 + 0.09/12]^(2*12) - 1] / (0.09/12)}
FV=700{[1.0075]^24 - 1] / (0.0075)}
FV=700 x {26.188471.......}
FV=$18,331.93
Note: This balance is on the assumption that 9% is compounded monthly.
NOTE (to the first Answer)
Mr A deposited 700$ only through the one year (2010), not through 2 years.
That means: in the year 2010 - 12deposits of 700$ each; in the year 2011 - 0 new deposits.
Through all the year 2011 amount of money (I mean a capital only) is unchanged and equels 8400$.
+36916 Using the same formula the first guest posted for an ordinary annuity
use n = 12 and R = .09/12 = .0075
FV=P{[1 + R]^N - 1}/ R
FV = 700 {(1.0075)^12 - 1}/(.0075) = 8755.31 after the first year....
Now this amount gets compound interest monthly for the next 12 months
8755.31 (1+.0075)^12 = $ 9576.62
