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2500/month for 10 yrs @ 7% interest. Also, is the interest compounded monthly due to monthly contributions? Thanks!

 Aug 3, 2017
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If the compounding period is not specified, then you take the interest rate to mean that it is compounded to match the periodic payments, which in this case is compounded monthly.

 

This is the formula you would use to calculate the Future Value of the monthly payments:

FV = P x {[1 + R]^N - 1 / R}

FV = 2,500 x {[1 + 0.07/12]^(10*12) - 1 / (0.07/12)}

FV = 2,500 x {[ 1.0058333]^120 - 1 / (0.0058333)}

FV = 2,500 x                173.08481.........

FV =$432,712.02 - This is the Future Value of the monthly deposits for 10 years @ 7% comp. monthly.

 Aug 3, 2017

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