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A woman invests $1500 at the start of each year for nine years. The invested money earns 6% interest. At the end of the ninth year and after nine payments, the value of her investment is most nearly...

A. $16,800
B. $20,800
C. None of these
D. $19,800
E. $18,300

1 Answer

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Final answer:

The value of the woman's investment after nine years with annual contributions of $1500 at 6% interest, using the future value of an annuity formula, closely matches option B. $20,800.

Step-by-step explanation:

The value of the woman's investment after nine years, with an annual contribution of $1500 at 6% interest, is calculated using the future value of an annuity formula. Assuming contributions are made at the start of each year (annuity-due), the formula is P × rac{((1 + r)^n - 1)}{r} × (1 + r), where P is the annual payment, r is the interest rate per period, and n is the number of periods.

Plugging in the values, we get $1500 × rac{((1 + 0.06)^9 - 1)}{0.06} × (1 + 0.06). Calculating this we find the investment's value is $15,700.54 at the end of nine years, therefore the closest answer is B. $20,800.

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