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Linda wants to buy a house in five years. Linda can save $23,000 a year starting...

Linda wants to buy a house in five years. Linda can save $23,000 a year starting today. If the money is invested into an account that earns 8.35% nominal interest, about how much will there be in the account to buy a house in five years?

$128,601.30

$147,222.39

$135,876.69
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Answer #1

Future value of annuity due=(1+rate)Annuity[(1+rate)^time period-1]/rate

=1.0835*23000[(1.0835)^5-1]/0.0835

=23000*6.40097348

=$147222.39(Approx).

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