Question

Derek will deposit $3,337.00 per year for 24.00 years into an account that earns 7.00%, The first deposit is made next year. How much will be in the account 39.00 years from today?

the exact answer is 535,626.11, can you please show me how you get to that answer? thank~

Answer 1

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

=3337[1-(1.07)^-24]/0.07

=3337*11.469334

=$38273.17(Approx)

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A =$38273.17*(1.07)^39

=$535,626.11(Approx).