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 $1,760 in her local bank, which pays her 8% annual interest. Luana decides that she will continue to do this for the next four years. Luana’s savings are an example of an annuity. How much will she save by the end of four years? $7,930.76 $6,741.15 $5,829.34 $8,565.22

Answer 1

FV= $7,930.76

Step-by-step explanation:

Giving the following information:

Annual deposit= $1,760

Annual interest rate= 8%

Number of periods= 4 years

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {1,760*[(1.08^4) - 1]} / 0.08

FV= $7,930.76