Question

You deposit $5000 each year into an account earning 7% interest compounded annually. How much will you have in the account in 30 years?

Note: Round your answer to the nearest cent.

Answer 1

Answer: 5000(0.07)^35 = 1.89^-37

Answer 2

We can solve this problem using the formula for the future value of an annuity:

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

where FV is the future value, P is the periodic payment, r is the interest rate per period, and n is the number of periods.

In this case, we have P = $5,000, r = 0.07 (since the interest is compounded annually), and n = 30 (since the deposits are made annually for 30 years).

Plugging in these values, we get:

FV = $5,000 * ((1 + 0.07)^30 - 1) / 0.07

FV = $5,000 * 111.131

FV = $555,655.00

Therefore, you will have approximately $555,655.00 in the account after 30 years.