Question

You want to buy new furniture for your home, and you can save $606 every year. You will make your first deposit one year from today. You plan to deposit the savings in a mutual fund that you think will achieve a return of 10% per year. Under these conditions, how much will you have in your savings account by the end of the 5 years?

Answer 1

The amount you will have in your savings account by the end of 5 years is approximately $970.56

Step-by-step explanation:

To calculate the amount of money you will have in your savings account by the end of 5 years, we can use the formula for compound interest:

A = P(1+r/n)^(nt)

Where:

• A is the total amount after time t
• P is the principal amount (the initial deposit)
• r is the annual interest rate (as a decimal)
• n is the number of times that interest is compounded per year
• t is the number of years the money is invested for

In this case, P = $606, r = 10% or 0.1, n = 1 (compounded annually), and t = 5 years. Plugging these values into the formula, we get:

A = 606(1 + 0.1/1)^(1*5) = $970.56

Therefore, you will have approximately $970.56 in your savings account by the end of 5 years.