Your daughter has been saving $500 a year for each of the last 10 years for her "sweet sixteen" party.How much is now in her party account (at the end of the tenth year)if she earned an annual rate of return of 6%?
A)$6,590.40
B)$7,680.04
C)$5,300.00
D)$8,714.84

Question

Quizplus · Accepted Answer

This is a problem involving the future value of an annuity, where equal payments are made into an account that earns interest. The formula to calculate the future value of an annuity is FV = P * [((1 + r)^n - 1) / r], where P is the payment amount, r is the annual interest rate, and n is the number of periods. Plugging in the values: P = $500, r = 0.06 (6% annual interest rate), and n = 10 years, the calculation gives us the future value of the annuity, which is approximately $6,590.40.

Your Daughter Has Been Saving $500 a Year for Each