Question

You decide to begin saving towards the purchase of a new car in 5 years. If you put $1,000 at the end of each of the next 5 years in a savings account paying 6% compounded annually, how much will you accumulate after 5 years?

Answer 1

Interest accumulated is $338.23 and total amount accumulated is $1338.23

Explanation:

Total Amount Compounded with compound interest yearly is calculated as

A = P (1 + r)ᵗ ⁵

P = principal/initial amount invested = $1000

r = rate of increase yearly = 6%

t = time period that passes = 5

A = 1000 (1 + 0.06)⁵

A = 1000 (1.06)⁵

A = $1338.23

Interest accumulated is $338.23

Hope this Helps!!