Answer-
The amount will be $8944.62 after 5 years.
Solution-
We know that,
[tex]\text{FV of annuity}=P[\dfrac{(1+r)^n-1}{r}][/tex]
Where,
P = Payment = $50 monthly
r = rate of interest compounded monthly= [tex]3\frac{1}{4}=3.25\%=0.0325[/tex]
n = number of period = 5 years = 5×12 = 60 months
Putting the values in the formula,
[tex]\text{FV of annuity}=50[\dfrac{(1+0.0325)^{60}-1}{0.0325}][/tex]
[tex]=50[\dfrac{(1.0325)^{60}-1}{0.0325}][/tex]
[tex]=50[\dfrac{6.8140-1}{0.0325}][/tex]
[tex]=50[\dfrac{5.8140}{0.0325}][/tex]
[tex]=50\times 178.8923[/tex]
[tex]=8944.62[/tex]
Therefore, the amount will be $8944.62 after 5 years.
