Carmen is planning to invest $200 in a retirement account at the beginning of each month for the next 20 years. The account is earning 3.15% interest, compounded annually. He used the following formula and variables to solve for the future value of the account after 20 years. He found that the future value of this account will be $65481.95. Is Carmen’s solution correct? If not, explain what he did wrong and provide the correct solution.

Question

anonymous · Answer

The future value I had is $ $66,422.05

N:240
I: 0.25878470% --> (1+3.15%)^(1/12)
Annuity: 200
Compute FV