Question

You plan to deposit $5,600 at the end of each of the next 20 years into an account paying 10.8 percent interest. a. How much will you have in your account if you make deposits for 20 years

Answer 1

Answer:

The amount of money in the account if d[posits were made every 20 years will be $351,384.32.

Step-by-step explanation:

This problem is related to annuity  present and future value.

We need to compute the annuity future value.

The formula to compute the annuity future value (FV) is:

 $FV=PV\times[\frac{(1+r)^{n}-1}{r}]$

Given:

P = Present value = $5,600

r = rate of interest = 10.8%

n = number of periods the money is deposited = 20

Compute the future value as follows:

$FV=PV\times[\frac{(1+r)^{n}-1}{r}]\\=5600\times[\frac{(1+0.108)^{20}-1}{0.108}]\\=351384.32$

Thus, the amount of money in the account after 20 years will be $351,384.32