Question

Scott deposits $5,000 at the end of each year into an account for five years. Assuming 6% interest annually, what is the value of his account in five years?

Answer 1

The formula of the future value of annuity ordinary is
Fv=pmt [(1+r)^(n)-1)÷r]
Fv future value?
PMT payment per year 5000
R interest rate 0.06
N time 5 years
Fv=5,000×(((1+0.06)^(5)−1)÷(0.06))
Fv=28,185.46....answer

Answer 2

The value of his account in 5 years is $28185.46

Explanation:

The given problem is of ordinary annuity and we have to find the future value.

The future value of an annuity is given by

`FV=P\left [ ((1+r)^n-1)/(r) \right ]`

We have,

P = $5,000, r = 0.06, n = 5

On substituting the values, we get

`FV=5000\left [ ((1+0.06)^5-1)/(0.06) \right ]`

`FV=\$28185.46`

Therefore, the value of his account in 5 years is $28185.46