How much will you have in a savings account in ten years, if you deposit $1000 in the account at the end of each year and the account earns 6% interest, compounded annually?

Question

Quizplus · Accepted Answer

To calculate the future value of the account, we can use the formula:

FV = P * (1 + r)^n + PMT * ((1 + r)^n - 1) / r

where:
P = initial deposit = $1000
r = annual interest rate = 6%
n = number of years
PMT = annual deposit = $1000

Plugging in the values, we get:

FV = $1000 * (1 + 0.06)^10 + $1000 * ((1 + 0.06)^10 - 1) / 0.06
FV = $1000 * 1.790847 + $1000 * 14.208407
FV = $13,181.25

Therefore, the amount in the savings account in ten years is $13,181. Answer choice C is the correct answer.

How Much Will You Have in a Savings Account in Ten