Question

You plan to deposit $5,000 at the beginning of each year in an account that pays 9% interest per year. How much will the account be worth at the end of 6 years (Enter the final answer as a positive number and round your answer to 2 decimals)? Your Answer:

Answer 1

Using the formula for the future value of an annuity:

FV = (PMT x (((1 + r)^n - 1) / r)) + (PMT x (1 + r)^n)

where:

PMT = $5,000 (the amount deposited at the beginning of each year)

r = 9% per year (interest rate)

n = 6 years

FV = (5000 x (((1 + 0.09)^6 - 1) / 0.09)) + (5000 x (1 + 0.09)^6)

FV = (5000 x (7.531684)) + (5000 x 1.611946)

FV = 37,658.42

Therefore, the account will be worth approximately $37,658.42 at the end of 6 years.