Question

You are about to graduate. You plan to continue your education at Harvard in 5 years. Your plan is to save $5,500 a year, beginning IMMEDIATELY. Overall, you are going to deposit 5 times in your account that pays 6.3%, annually. How much money will you have in your account 5 years from today? Include up to two decimals in your answer.

	A.	$34,333.25
	B.	$43,433.87
	C.	$33,155.24
	D.	$23,511.15
	E.	$32,200.23

Answer 1

	A/c balance after 5 years	(1+r)×P×[(1+r)^n-1]÷r
	Here,
A	Interest rate per annum	6.3%
B	Number of years	5
C	Number of compoundings per per annum	1
A÷C	Interest rate per period ( r)	6.3%
B×C	Number of periods (n)	5
	Payment per period (P)	$                                                         5,500
	A/c balance after 5 years	$                33,155.24
		(1+6.3%)×5500×((1+6.3%)^5-1)÷6.3%