Question

John decides to take his annual Christmas bonus of $2,000 and invest it each year for the next five years, in stock he believes can earn an 8% annual return. How much will John's investment be worth at the end of the five years

Answer 1

FV= $11,733.20

Step-by-step explanation:

Giving the following information:

Annual deposit= $2,000

Number of periods= 5 years

Interest rate= 8% = 0.08

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {2,000*[(1.08^5) - 1]} / 0.08

FV= $11,733.20