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 1 year ago

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