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You want to go to Europe 5 years from now, and you can save $7,300 per...

You want to go to Europe 5 years from now, and you can save $7,300 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?

a.

$50,608.61

b.

$51,906.27

c.

$46,715.64

d.

$32,873.97

e.

$43,255.22
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Answer #1

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

=7300[(1.085)^5-1]/0.085

=7300*5.92537283

=$43255.22(Approx).

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