how to calculate annuity?
You begin saving for your retirement by investing $660 per month in an annuity with a guaranteed interest rate of 2% per year. With continuous investment and compounding, how much will you have accumulated in the annuity by the time you retire in 41 years? (Round to the nearest cent.)
Let’s assume the 2% interest is compounded monthly. then, the monthly rate is .02/12. 41 years equals 492 months. The answer to your question is:
$660 x [(1 + (.02/12))^492 - 1] / (.02/12) = $897,904.40
Compound interest – like rice on a chessboard
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