# Future Value of an annuity

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1. Oct 22, 2012

### Niaboc67

1. The problem statement, all variables and given/known data
Mike needs $12.000 in 5 years. How much must he deposit at the end of each month for 5 years in an account paying 2.9% compounded monthly so that he will have$12.000 in 5 years?

2. Relevant equations

FV formula: S=R*((1+i)^n -1)/i

I think that is the correct formula

3. The attempt at a solution

2. Oct 22, 2012

### tiny-tim

Hi Niaboc67!

(try using the X2 and X2 buttons just above the Reply box
Yes, that is the correct formula,

because it equals R*∑k=0n-1 (1+i)k.

However, you'll never remember that formula in the exam, so you need to be able to derive it yourself,

sooo …

i] can you prove that the two formulas are the same?

ii] can you see why the second formula works?

3. Oct 22, 2012

### Ray Vickson

Well, if you know i and n you just have a computation to perform.

RGV