John deposits $2,000 per year at the end of the year for the next 20 years into an IRA account that pays 6%. How much will John have on deposit at the end of 20 years?
A) $67,520
B) $73,572
C) $81,990
D) $75,686

Question

Quizplus · Accepted Answer

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 = $2,000, r = 6%, and n = 20. Plugging these values into the formula, we get:FV = $2,000 * [(1 + 0.06)^20 - 1] / 0.06= $2,000 * [3.2071 - 1] / 0.06= $2,000 * 2.2071 / 0.06= $73,572Therefore, John will have $73,572 on deposit at the end of 20 years.

John Deposits $2,000 Per Year at the End of the Year