Answer:
Therefore the value annuity is $6,564.06.
The interest is $1,164.06.
Step-by-step explanation:
The compound monthly interest formula
[tex]S=P\frac{(1+\frac rn)^{nt}-1}{\frac{r}{n}}[/tex]
Here
S= The future value.
P= Periodic investment= $50
r= rate of interest= 4.25%= 0.0425
t = time in year= 9 year.
n= 12 [ Since compounded monthly]
Putting the all values
[tex]S=50\times \frac{(1+\frac{0.0425}{12})^{12\times 9}-1}{\frac{0.0425}{12}}[/tex]
[tex]=50\times \frac{(1.0035)^{108}-1}{\frac{0.0425}{12}}[/tex]
=$6,564.06 (approx)
Therefore the value annuity is $6,564.06.
The periodic deposit $50 at the end of every month for 9 year.
9 year= (12×9) months
Total deposit =$ (50×12×9)
=$5,400
Interest = Future value - Total deposit
=$(6,564.06-5,400)
=$1,164.06
The interest is $1,164.06.
