Question

to create a college fund, a parent makes a sequence of 18 yearly deposits of $900 each in a savings account on which interest is compounded annually at 4.5%. find the amount of the annuity.

the amount of the annuity is $square$
(type an integer or a decimal. round to the nearest cent as needed.)

Explanation:

Step1: Identify annuity formula

Future value of ordinary annuity: $FV = P \cdot \frac{(1 + r)^n - 1}{r}$
Here, $P = 900$, $r = 0.045$, $n = 18$.

Step2: Calculate $(1 + r)^n$

$(1 + 0.045)^{18} \approx 2.208476$

Step3: Compute numerator

$2.208476 - 1 = 1.208476$

Step4: Divide by r

$\frac{1.208476}{0.045} \approx 26.85502$

Step5: Multiply by P

$900 \cdot 26.85502 \approx 24169.52$

Answer:

24169.52