Question

Chris plans on saving $4,000 a year at 4 percent interest for five years. Which one of these is the correct formula for computing the future value at Year 5 of these savings

Answer 1

FV= $21,665.29

Step-by-step explanation:

Giving the following information:

Chris plans on saving $4,000 a year at 4 percent interest for five years.

To calculate the future value, you need to use the following formula:

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

A= annual deposit

FV= {4,000*[(1.04^5) - 1]} / 0.04

FV= $21,665.29