Question

n an attempt to have funds for a down payment in five years, James Dupont plans to save $3,800 a year for the next five years. With an interest rate of 4 percent, what amount will James have available for a down payment after the five years? Use Exhibit 1-B. (Round FVA factor to 3 decimal places and final answer to 2 decimal places.)

Answer 1

James will have $20,572.50 available for a down payment after five years.

Step-by-step explanation:

To calculate the amount James will have available for a down payment after five years, we can use the formula for the future value of an annuity:

FV = Pmt * ((1 + r)n - 1) / r

Where:
Pmt = annual savings amount = $3,800
r = interest rate per period = 4%
n = number of periods = 5

Substituting in the values:

FV = $3,800 * ((1 + 0.04)5 - 1) / 0.04
= $3,800 * (1.045 - 1) / 0.04
= $3,800 * (1.2167 - 1) / 0.04
= $3,800 * 0.2167 / 0.04
= $3,800 * 5.4175
= $20,572.50

Therefore, James will have $20,572.50 available for a down payment after five years.

Answer 2

$20,582.03

Step-by-step explanation:

For this question, we have to determine the future value that is shown on the attachment. Kindly find it below:

Data provided in the question

NPER = 5 years

PMT = $3,800

Rate of interest = 4%

PV = $0

The formula is shown below:

= -FV(Rate;NPER;PMT;PV;type)

So, after solving this, the future value is $20,582.03