Question

You plan to enroll in graduate school 3 years from now, and you plan to save $9,400 per year, beginning immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these assumptions, how much will you have 3 years from today?

Group of answer choices
$38,732.38
$31,235.79
$24,676.28
$24,988.63
$35,921.16

Answer 1

To calculate the future value of the deposits, we can use the formula for the future value of a series of deposits:

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

Where:

P = Annual deposit amount ($9,400)

r = Interest rate per period (5.2% or 0.052)

n = Number of periods (3 years)

Plugging in the values, we get:

Future Value = $9,400 * ((1 + 0.052)^3 - 1) / 0.052

Calculating this expression will give us the future value of the deposits after 3 years.

Future Value = $9,400 * (1.052^3 - 1) / 0.052

Future Value ≈ $9,400 * (1.165308 - 1) / 0.052

Future Value ≈ $9,400 * 0.165308 / 0.052

Future Value ≈ $29,006.15

Therefore, you will have approximately $29,006.15 three years from today. None of the provided answer choices match this amount.