Question

In: Finance

You want to buy a fancy car. For this goal, you plan to save $8,000 per...

You want to buy a fancy car. For this goal, you plan to save $8,000 per year, beginning immediately. You will make 5 deposits in an account that pays 8% interest. Under these assumptions, how much will you have 5 years from today?

a.   $51,402

b.   $46,718

c.    $47,635

d.   $50,687

Solutions

Expert Solution

Given

Rate = 8%

Number of years (nper) = 5

Payment = $8000

Using excel FV function we can the calculate amount saved for 5 years from today:

Future value = FV(rate,nper,-payment,pv,1)

We take type as 1 because as deposits are made at the beginning of the year

Future value of the deposit = FV(8%,5,-8000,0,1)

                             = $50687.43 ≈$50687

Answer: Option d

Using financial calculator:

jeff jeffy answered 2 years ago
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