Ichelle is attending college and has a part-time job. once she finishes college, michelle would like to relocate to a metropolitan area. she wants to build her savings so that she will have a "nest egg" to start her off. michelle works out her budget and decides she can afford to set aside $9090 per month for savings. her bank will pay her 4 %4% per year, compounded monthly, on her savings account. what will be michelle's balance in five years?
Michelle is depositing a constant amount so this is an annuity. The balance on her account will be the future value of an annuity.
5 years to months = 5 * 12 = 60 months
3% to monthly rate = 3%/12 = 0.25%
Future value of annuity