Question

If you begin saving $2000 a year at 5% for nine years, what will the funds grow to?

a) $18,000
b) $9,000
c) $20,000
d) $22,500

Answer 1

The funds will grow to $24,217 over nine years with an annual interest rate of 5%.

Step-by-step explanation:

To calculate the funds growth over nine years with an annual interest rate of 5%, we can use the formula for compound interest:

FV = P(1+r)^n

Where:

• FV is the future value
• P is the principal (amount being saved each year)
• r is the annual interest rate
• n is the number of years

Plugging in the values, we get:

FV = 2000(1+0.05)^9 = $24,217

Therefore, the funds will grow to $24,217.