Question

Luana loves shopping for clothes, but considering the state of the economy, she has decided to start saving. At the end of each year, she will deposit $1,790 in her local bank, which pays her 11% annual interest. Luana decides that she will continue to do this for the next eight years. How much will she save by the end of eight years?

Answer 1

Answer: $2,493.522

Step-by-step explanation:

Given:

Luana will deposit $570 every year for 4 years. This is an annuity as same amount is deposited every year.

Rate is 6% or 0.06

We have to compute Luana's savings at the end of 4th year.

Refer future value of annuity factor table at 6%, 4th year. Annuity factor is 4.3746.

Savings = Yearly deposit × Annuity factor

            = 570 × 4.3746

            = $2,493.522

Therefore, Luana will save $2,493.522 by the end of 4 years.