Question

Suppose you decide to save $1,000 at the end of every year for the

next five years. If you can earn 6% on the account, what is the
value of the account at the end of five years?

Answer 1

The value of the account at the end of five years is $1,338.23.

Step-by-step explanation:

To calculate the value of an account with compounded interest, we can use the formula: A = P * (1+r)^n, where A is the final amount, P is the principal (initial investment), r is the interest rate per period, and n is the number of periods.

In this case, the principal is $1,000 and the interest rate is 6% per year. Since we are saving for five years, the number of periods is 5.

Substituting the values into the formula, we get: A = 1,000 * (1 + 0.06)^5 = $1,338.23.