Question

Assume you deposit \( \$ 4,000 \) at the end of each year into an account paying 9.5 percent interest. Requirement 1: How much money will you have in the account in 20 years? (Do not include the dolla

Answer 1

To calculate the future value of an account with regular deposits and compound interest, use the formula FV = P(1 + r)^n + (P(1 + r)^n-1) / r. Plugging in the values, the future value after 20 years is approximately $172,701.54.

Step-by-step explanation:

To calculate the future value of an account with regular deposits and compound interest, we can use the formula:

FV = P(1 + r)^n + (P(1 + r)^n-1) / r

where FV is the future value, P is the annual deposit, r is the interest rate, and n is the number of years.

In this case, we have P = $4,000, r = 9.5%, and n = 20 years. Plugging these values into the formula:

FV = $4,000(1 + 0.095)^20 + ($4,000(1 + 0.095)^20 - 1) / 0.095

Simplifying the equation, we get:

FV = $4,000(1.095)^20 + ($4,000(1.095)^20 - 1) / 0.095

Calculating this equation, the future value of the account after 20 years is approximately $172,701.54.