9
QuizMultiple Choice

Annuities

Question 9 • FT GMS AMDM B IC – 72

$765.13 is deposited at the beginning of each month for 2 years in an account paying 12% interest compounded monthly. Find the amount of the account. Round your answer to the nearest cent.

Answer
A
$18,911.18
B
$19,873.08
C
$20,844.59
D
$21,403.34

Explanation

Because deposits are made at the beginning of each month, this is an annuity due. The monthly interest rate is 12% ÷ 12 = 1%, and there are 2 × 12 = 24 deposits. The future value is $765.13 × [((1.01)^24 − 1) ÷ 0.01] × 1.01 = $20,844.59, so the correct choice is $20,844.59.

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