Question

You want to quit your job and return to school for an MBA degree 3 years from now, and you plan to save $5,000 per year, beginning immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these assumptions, how much will you have 3 years from today? a. $17,943.97 b. $18,442.41 c. $14,953.30 d. $17,445.52 e. $16,614.78

Answer 1

Answer: $16,614.78

Step-by-step explanation:

As you are making a constant deposit every year beginning immediately, this is an Annuity due.

The value in 3 years will be:

= Amount deposited * (1 + i) * (( 1 + i) ^n - 1) / i

= 5,000 * (1 + 5.2%) * (( 1 + 5.2%)³ - 1) / 5.2%

= $‭16,614.78304‬

= $16,614.78