Question

Deposits of $109.00 are made at the end of every year for 5 years. What will the deposits amount to if the interest is 7% compounded annually?

a) $606.62

b) $565.88

c) $587.77

d) $628.51

Answer 1

The deposits will amount to $151.62 if the interest is 7% compounded annually.

Step-by-step explanation:

To calculate the deposits over 5 years with a 7% interest compounded annually, we can use the formula for compound interest:

A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial deposit), r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, P = $109.00, r = 7%, n = 1 (compounded annually), and t = 5.

Plugging these values into the formula, we get A = $109.00(1 + 0.07/1)^(1*5) = $109.00(1.07)^5 = $109.00(1.40255) = $151.62.

Therefore, the deposits will amount to $151.62.