You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 8.5% per year. Under these conditions, how much will you have just after you make the 5th deposit, 5 years from now?

Question

Business

Carolyn Fletcher

7 May, 17:17

You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 8.5% per year. Under these conditions, how much will you have just after you make the 5th deposit, 5 years from now?

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Answers (1)

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Matthias Kelley · Answer 1

you have just after you make the 5th deposit is $18369

Explanation:

Given data

time t = 5 year

principal p = $3100

rate r = 8.5% = 0.085

to find out

how much you have just after you make the 5th deposit

solution

we will apply here future value formula that is

Future value = principal (1 + rate) ^5 - 1 / rate

put all value here

Future value = principal (1 + rate) ^5 - 1 / rate

Future value = 3100 (1 + 0.085) ^5 - 1 / 0.085

Future value = 18368.66

you have just after you make the 5th deposit is $18369