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 that you think will return 8.5% per year.Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?
A)$18,369
B)$19,287
C)$20,251
D)$21,264
E)$22,327

Question

Quizplus · Accepted Answer

The correct answer is A.The future value of an annuity is calculated using the formula:FV = P * [(1 + r)^n - 1] / rwhere:P is the annual paymentr is the annual interest raten is the number of yearsIn this case, P = $3,100, r = 8.5%, and n = 5. Plugging these values into the formula, we get:FV = $3,100 * [(1 + 0.085)^5 - 1] / 0.085= $3,100 * [1.4802 - 1] / 0.085= $3,100 * 0.4802 / 0.085= $18,369.23Therefore, the correct answer is A.

Want to Go to Europe 5 Years from Now, and You