Answer:
$934.30
Step-by-step explanation:
We have been given that Alfred invest $60 a month in annuity that earns 4% APR and is compounded monthly. We are asked to find the future value of Alfred's account after 5 years.
[tex]FV=C_0\cdot (1+r)^n[/tex], where,
[tex]C_0=\text{Initial value}[/tex],
[tex]r=\text{APR in decimal form}[/tex],
[tex]n=\text{Number of times interest is compounded per year}[/tex].
[tex]r=4\%=\frac{4}{100}=0.04[/tex]
[tex]FV=\$60\cdot (1+0.04)^{12*5}[/tex]
[tex]FV=\$60\cdot (1.04)^{70}[/tex]
[tex]FV=\$60\cdot 15.57161835[/tex]
[tex]FV=\$934.2971[/tex]
[tex]FV\approx \$934.30[/tex]
Therefore, the future value of Alfred's account in 5 years would be $934.30.
