You are planning to put $4,000 in the bank at the end of each year for the next

Question

You are planning to put $4,000 in the bank at the end of each year for the next seven years in hopes that you will have enough money for a trip around the world if you are investing at an annual interest rate of 8%, how much money will you have at the end of seven years rounded to the nearest whole dollar? $42,829 $28,553 $35,691 You've decided to deposit your money in the bank at the beginning of the year instead of the end of the year, but now you are making payments of $4,000 at an annual interest rate of 8%. How much money will you have available at the end of seven years-rounded to the nearest whole dollar? $35,691 $53,964 $26,982 $38,546 O Type here to search

Explanation / Answer

1)

Future value = Annuity * [ ( 1 + R)n - 1] / r

Future value = 4,000 * [ ( 1 + 0.08)7 - 1] / 0.08

Future value = 4,000 * 8.922803

Future value = $35,691

Keys to use in financial calculator: PMT = -4000, I/Y = 8, N = 7, CPT FV

2)

Future value = ( 1 + r) * Annuity * [ ( 1 + R)n - 1] / r

Future value = 1.08 * 4,000 * 8.922803

Future value = $38,546

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