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Time-Value-of-Money and Amortization Worksheets 35
Example: Saving With Monthly Deposits
Note: Accounts with payments made at the beginning of the period are
referred to as annuity due accounts. Interest begins accumulating earlier
and produces slightly higher yields.
You 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?
Answer: Depositing $200 at the beginning of each month for 20 years
results in a future amount of $111,438.31.
To Press Display
Set all variables to defaults. &}!
RST 0.00
Set payments per year to 12. &[12
!
P/Y=
12.00
1
Set beginning-of-period
payments.
&]&
V
BGN
Return to standard-calculator
mode.
&U
0.00
Enter number of payments
using payment multiplier.
20 &Z,
N=
240.00
1
Enter interest rate.
7.5 -
I/Y=
7.50
1
Enter amount of payment.
200 S/
PMT=
-200.00
1
Compute future value.
C0
FV=
111,438.31
*