If you deposit $15,000 per year for 9 years (each deposit is made at the end...

If you deposit $15,000 per year for 9 years (each deposit is made at the end of each year) in an account that pays an annual interest rate of 9%, what will your account be worth at the end of 9 years?

Please show details and related formulas, I will give thumbs up ASAP once I check the answer.

Solutions

Expert Solution

Here deposits is every year made at end of each year. so, we use future value of ordinary annuity concept.

Future value of ordinary annuity formula = P * [( 1 + i)ⁿ - 1 ] / i

Here p = periodic deposit = $15,000

i = interest rate per period = 9%

n = number of periods or years = 9 years

Future value of ordinary annuity formula = $15,000 * [ (1+ 0.09)⁹ - 1 ] / 0.09

= 15,000 * 1.171893279442309389 / 0.09

Account balance worth at the end of 9 years = $ 195,315.5465737182315

jeff jeffy answered 2 years ago

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