Question

Frances loves shopping for clothes, but considering the state of the economy, she has decided to start saving. At the end of each year, she will deposit $700 in her local bank, which pays her 9% annual interest. Frances decides that she will continue to do this for the next 5 years. Frances’s savings are an example of an annuity. How much will she save by the end of 5 years, rounded to the nearest whole dollar?

Answer 1

Future Value= $4,189.30

Step-by-step explanation:

Giving the following information:

Investment= $700 annual

Interest rate= 9%

Frances decides that she will continue to do this for the next 5 years.

To calculate the final value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {700*[(1.09^5)-1]} / 0.09

FV= $4,189.30