Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her...

Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her $170 for this service. Over a period of 18 years, how much does Elaine gain from preparing her own tax return? Assume she can earn 3 percent on her savings.

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

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

Periodic payment	P=	$ 170.00

rate of interest per period	r=
Rate of interest per year		3.0000%

Payment frequency		Once in 12 months
Number of payments in a year		1.00
rate of interest per period		0.03*12/12	3.0000%

Number of periods
Number of years		18
Number of payments in a year		1
Total number of periods	n=	18

FV of annuity	=	170* [ (1+0.03)^18 -1]/0.03

FV of annuity	=	3,980.45

Savings is $3,980.45

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jeff jeffy answered 1 year ago

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