Final answer:
To calculate the future value of an annuity with yearly deposits of $520 at 6% interest for 20 years, you would use the annuity future value formula. After 20 years, you would have $19,127.32.
Step-by-step explanation:
To calculate the future value of an annuity where you deposit $520 at the end of each year with an interest rate of 6% compounded annually for 20 years, we will use the future value of an annuity formula:
FV = P * ((1 + r)^n - 1) / r
where:
- FV is the future value of the annuity,
- P is the payment amount per period ($520),
- r is the annual interest rate (6% or 0.06),
- n is the number of periods (20 years).
Plugging in the values, we get:
FV = $520 * ((1 + 0.06)^20 - 1) / 0.06
This simplifies to:
FV = $520 * ((1.06)^20 - 1) / 0.06
FV = $520 * (3.207 - 1) / 0.06
FV = $520 * 2.207 / 0.06
FV = $520 * 36.7833
FV = $19,127.32
After 20 years, you would have $19,127.32.