Question

You set up a college fund in which you pay $5000 each year at the beginning of the year. How much money (in $) will you have accumulated in the fund after 24 years, if your fund earns 9% compounded annually?

Answer 1

- You will pay $5000 each year at the beginning of the year.

Calculating the Accumulated Future Value in fund at the end of 24 years using Future Value of Annuity due formula:-

Where, C= Periodic Payments = $5000

r = Periodic Interest rate = 9%

n= no of periods = 24

Future Value = $418,504.48

So, the money (in $) will you have accumulated in the fund after 24 years is $418,504.48