Question

Suppose $200 is deposited in a savings account at the beginning of each of 15 years and the account pays 8% per annum, the value at the end of 15 years will be about:_________.

Answer 1

FV= $5,864.86

Step-by-step explanation:

Giving the following information:

Annual deposit= $200 at the beginning

Number of periods= 15 years

Interest rate= 8%

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

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

A= annual deposit

FV= {200*[(1.08^15) - 1]}/0.08 + {[(200*(1.08^15)] - 200}

FV= 5,430.42 + 434.44

FV= $5,864.86