User Manual

2: TVM and Amortization Worksheets 51

Saving for the Future by Making Monthly Deposits

Accounts with payments made at the beginning of the period

are referred to as “annuity due” accounts. Interest on annuity

due accounts starts accumulating earlier and produces slightly

higher yields.

An individual has decided to invest $200 at the beginning of

each month in a retirement plan. What will the account balance

be at the end of 20 years if the fund earns an annual interest of

7.5 % compounded monthly, assuming beginning-of-period

payments?

Future value(FV) = ?

Interest = 7.5%

Number of payments (N) = 240

. . .

Payment amount (PMT) = $200

Example: Regular Deposits (Annuity Due)

Procedure Keystrokes Display

Set all variables to defaults.

}

RST 0.00

Set beginning-of-period

payments.

]

BGN

Return to calculator mode.

0.00

Enter number of payments

using payment multiplier.

N= 240.00



Enter interest rate.

7.5

I/Y= 7.50



Enter amount of payment.

200

PMT= -200.00



Compute future value.

FV= 111,438.31



Depositing $200 at the beginning of each month for 20 years

results in a future amount of $111,438.31.