In 1-2 sentences, explain why the future value of an account that earns monthly payments of $25 at a variable annual interest rate for 36 months cannot be calculated by using the formula for the future value of an annuity. (2 points)
1 answer
The future value of an annuity formula assumes a constant annual interest rate, while in this scenario the annual interest rate is variable. Additionally, the formula does not account for deposits made on a monthly basis.