David is entering high school and is determined to save money for college.

Determining future value

David is entering high school and is determined to save money for college. David feels

he can save $5,000 each year for the next four years from his part-time job. If David is

able to invest at 6%, how much will he have when he starts college?

Solutions

Expert Solution

Step 1: Definition of future value

The future value is the value of the investment on a future date. The future value of the bonds teels us about the value of the at the time when the bonds become mature.

Step 2: Calculation of future value.The future value of bonds are calculated by multiplying the payments of the period with the future value of the annuity.

David will have $21,875 when he starts college.

Sahil Dangi answered 2 years ago

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