Question

Mr. Blochirt is creating a college investment fund for his daughter. He will put in $1,000 per year for the next 5 years starting one year from now and expects to earn a 6% annual rate of return. How much money will his daughter have when she starts college?(A) $5,637(B) $5,000(C) $4,212(D) $12,263

Answer 1

(A) $5,637

Step-by-step explanation:

We need to solve for the future value of an ordinary annuity

`C * ((1+r)^(time) -1)/(rate) = FV\\`

C 1,000

time 5

rate 0.06

`1000 * ((1+0.06)^(5) -1)/(0.06) = FV\\`

FV $5,637.0930