He would have saved $87,221.02 after 1 year
He would have saved $268,335.90 after 3 years
What is an ordinary annuity?
An ordinary annuity means a fixed amount invested at specific intervals, in this case, $7,185.51 is invested monthly, which means that its future value can be computed using the future value formula of an ordinary annuity as shown below:
FV=PMT*(1+r)^N-1/r
FV=future value of an ordinary annuity=unknown
FV after 1 year:
PMT=monthly payment=$7,185.51
r=monthly interest rate=2.5%/12=0.00208333333333333
N=number of months in 1 year=12
FV=$7,185.51*(1+0.00208333333333333)^12-1/0.00208333333333333
FV=$7,185.51*(1.00208333333333333)^12-1/0.00208333333333333
FV=$7,185.51*0.02528845698324970/0.00208333333333333
FV=$87,221.02
FV after 3 years:
PMT=$7,185.51
r=monthly interest rate=2.5%/12=0.00208333333333333
N=number of months in 3 years=36
FV=$7,185.51*(1+0.00208333333333333)^36-1/0.00208333333333333
FV=$268,335.90
Find out more about future value of an ordinary annuity on:https://brainly.com/question/24703884
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