If you invest $2,000 at the end of each year for five years and you earn 7% interest compounded annually, how much will you have accumulated at the end of the fifth year?
A)$10,700
B)$11,501
C)$12,307
D)$14,026

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 amount invested each yearr is the annual interest raten is the number of yearsIn this case, P = $2,000, r = 7%, and n = 5. Plugging these values into the formula, we get:FV = $2,000 * [(1 + 0.07)^5 - 1] / 0.07= $2,000 * [1.4026 - 1] / 0.07= $2,000 * 0.4026 / 0.07= $11,501.43Therefore, the correct answer is B) $11,501.

If You Invest $2,000 at the End of Each Year