Question

In: Accounting

You want to buy a condo 7 yearsfrom now, and you plan to save $4,000 per...

You want to buy a condo 7 yearsfrom now, and you plan to save $4,000 per year, beginning immediately. You will make 7 deposits in an account that pays 8% interest, compounded annually. Under these assumptions, how much will you have 7 years from today?

a.$39,110.34

b.$37,925.96

c.$38,546.51

d.$36,976.84

Solutions

Expert Solution

The correct answer is "C. $38,546.51" calculated as follows:

Year Installment FVF @ 8% Future value
1             4,000 1.713824269          6,855.30
2             4,000 1.586874323          6,347.50
3             4,000 1.469328077          5,877.31
4             4,000 1.36048896          5,441.96
5             4,000 1.259712          5,038.85
6             4,000 1.1664          4,665.60
7             4,000 1.08          4,320.00
Future value       38,546.51

ekkarill92 answered 3 years ago
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