Kaeli Company will invest $10,000 a year for 5 years, with all investments at yearend. If the fund earns 10% compound interest, what amount will be in the fund at the end of 5 years?
A)$60,000
B)$61,051
C)$65,000
D)$67,156

Question

Quizplus · Accepted Answer

Using the formula for future value of an annuity: FV = PMT x (((1 + r)^n - 1) / r) where FV is the future value, PMT is the annual investment, r is the interest rate, and n is the number of years. Plugging in the values: FV = 10,000 x (((1 + 0.1)^5 - 1) / 0.1) FV = 10,000 x (1.61051) FV = $<<10000*1.61051=16105.1>>16,105.10 Since the question asks for the total amount at the end of 5 years, we need to add the total amount of investments made: Total = FV + (PMT x n) Total = $16,105.10 + ($10,000 x 5) Total = $<<16105.1+50000=66105.1>>66,105.10 Therefore, the closest answer choice is B) $61,051.

Kaeli Company Will Invest $10,000 a Year for 5 Years