John Mason decided to save $2,250 at the end of each of the next three years to pay for a vacation. If he invests it at 8 percent, how much will he have at the end of three years? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The future value of an annuity is calculated using the formula:FV = P * [(1 + r)^n - 1] / rwhere:P is the periodic paymentr is the annual interest raten is the number of periodsIn this case, P = $2,250, r = 8%, and n = 3. Plugging these values into the formula, we get:FV = $2,250 * [(1 + 0.08)^3 - 1] / 0.08= $2,250 * [1.2544 - 1] / 0.08= $2,250 * 0.2544 / 0.08= $7,403.04Rounding to the nearest dollar, the answer is $7,403.

John Mason Decided to Save $2,250 at the End of Each