MATH SOLVE

4 months ago

Q:
# You want to go to europe 5 years from now, and you can save $3,800 per year, beginning one year from today. you plan to deposit the funds in a mutual fund that you think will return 8.5% per year. under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?

Accepted Solution

A:

Using the future value annuity to solve the question we proceed as follows:

FV of annuity=P{[(1+r)^n-1]/r}

P=periodic Payment

r=rate per period

n=number of periods

from the question:'

P=$3,800

r=8.5%

n=5 years

hence:

A=3800{[(1+0.085)^5-1]/0.085}

A=$22,516.42

FV of annuity=P{[(1+r)^n-1]/r}

P=periodic Payment

r=rate per period

n=number of periods

from the question:'

P=$3,800

r=8.5%

n=5 years

hence:

A=3800{[(1+0.085)^5-1]/0.085}

A=$22,516.42