On December 28 each year, you are planning to make a charitable donation of $2320 and...

On December 28 each year, you are planning to make a charitable donation of $2320 and are in the 30 percent tax bracket. You are planning to deposit the tax savings in a savings account for the next 17 years at 4 percent, what will be the future value of that savings account?

Use the appropriate Time Value of Money table [Exhibit 1-A, Exhibit 1-B, Exhibit 1-C, OR Exhibit 1-D]

(Round your answer to the nearest whole number. Do not include the comma, period, and "$" sign in your response.)

Your Answer:

Expert Solution

Tax saving = 2,320 * 30% = 696

FV of annuity	=	P * [ (1+r)^n -1 ]/ r

Periodic payment	P=	$ 696.00

rate of interest per period	r=
Rate of interest per year		4.0000%

Payment frequency		Once in 12 months
Number of payments in a year		1.00
rate of interest per period		0.04*12/12	4.0000%

Number of periods
Number of years		17
Number of payments in a year		1
Total number of periods	n=	17

FV of annuity	=	696* [ (1+0.04)^17 -1]/0.04

FV of annuity	=	16,493.47

Future value of savings is $16,493.47

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