If you deposit $5,000 at the end of each of the next 20 years into an...

If you deposit $5,000 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much money will you have in the account in 20 years? How much will you have if you make deposits for 40 years? Show Work.

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Expert Solution



	This can be solved using the Future value of annuity
	Future value of annuity is = P*((1+r)^n-1)/r
	P is Deposit at the end of each year = $ 5,000/.
	"n" is No of years = 20
	"r" is Rate of Interest = 10.80%
	Future value of annuity is = ?
	Future value of annuity is = 5000*((1+0.108)^20-1)/0.108
	Future value of annuity is = 5000*(6.77670/0.108)
	Future value of annuity is = 5000*62.74720
	Future value of annuity is = $ 313,736/.
	Money will you have in the account in 20 years = $ 313,736/.

	P is Deposit at the end of each year = $ 5,000/.
	"n" is No of years = 40
	"r" is Rate of Interest = 10.80%
	Future value of annuity is = ?
	Future value of annuity is = 5000*((1+0.108)^40-1)/0.108
	Future value of annuity is = 5000*(59.47702/0.108)
	Future value of annuity is = 5000*550.71319
	Future value of annuity is = $ 2,753,566/.
	Money will you have in the account in 20 years = $ 2,753,566/.

jeff jeffy answered 1 year ago

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