Question

You can save $1,000 per year for the next six years in an account earning 10 percent per year. How much will you have at the end of the sixth year if you make the first deposit today?

Answer 1

You will have approximately $1,771.56 at the end of the sixth year.

Step-by-step explanation:

To calculate the total amount you will have at the end of the sixth year, we can use the formula for compound interest:

Amount = Principal * (1 + interest rate)^time

In this case, the principal is $1,000, the interest rate is 10% per year, and the time is 6 years. Plugging these values into the formula gives:

Amount = $1,000 * (1 + 0.10)^6

Calculating this, we find that you will have approximately $1,771.56 at the end of the sixth year.

Answer 2

At the end of the sixth year, you will have:

= $8,487.17.

Step-by-step explanation:

a) Data and Calculations:

Annual savings = $1,000

Interest rate per year = 10%

Period of savings = 6 years

First deposit = today

From an online financial calculator:

N (# of periods) 6

I/Y (Interest per year) 10

PV (Present Value) 0

PMT (Periodic Payment) 1000

Results

FV = $8,487.17

Sum of all periodic payments $6,000.00

Total Interest $2,487.17