Question

Gayle starts to save at age 20 for an extended vacation around the world that she will take on her 45th birthday. She will contribute $1000 each year to the account, which earns 1.65% annual interest, compounded quarterly. What is the future value of this investment when she takes her trip?

Answer 1

Answer: $30,867.18. I just took the test.

Answer 2

For this case we have the following equation:
P (t) = P (1 + r / n) ^ (n * t)
Where,
P: initial investment
r: interest
n: periods
t: time
she will take on her 45th birthday:
for t = 25:
P (25) = 1000 * (1 + 0.0165 / 4) ^ (4 * 25)
P (25) = 1509.31 $
Answer:
The future value of this investment when she takes her trip is:
P (25) = 1509.31 $