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Example 9 from Algebra and Trigonometry, 13.4 Series and Their Notations
A deposit of $100 is placed into a college fund at the beginning of every month for 10 years. The fund earns 9% annual interest, compounded monthly, and paid at the end of the month. How much is in the account right after the last deposit?
Work it out on paper first. Then open the solution one step at a time, and stop as soon as you can finish on your own.
The value of the initial deposit is $100, so A total of 120 monthly deposits are made in the 10 years, so To find divide the annual interest rate by 12 to find the monthly interest rate and add 1 to represent the new monthly deposit.
Substitute into the formula for the sum of the first terms of a geometric series, and simplify to find the value of the annuity.
So the account has $19,351.43 after the last deposit is made.
The book's Try It right after this example: same idea, new numbers. Only the answer is given.
At the beginning of each month, $200 is deposited into a retirement fund. The fund earns 6% annual interest, compounded monthly, and paid into the account at the end of the month. How much is in the account if deposits are made for 10 years?
How did it go?