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? (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. )(Use appropriate factor from the PV tables.Round your final answer to the nearest dollar amount. )

Question

Quizplus · Accepted Answer

To calculate the future value of an annuity, we use the formula:
FV = PMT * [(1 + r)^n - 1] / r
where,
PMT = payment amount = $1000
r = interest rate per period = 6%/year = 0.06
n = number of periods = 10 years
Using the formula, we get:
FV = $1000 * [(1 + 0.06)^10 - 1] / 0.06
= $1000 * [1.790847 - 1] / 0.06
= $1000 * 0.790847 / 0.06
= $13,181 (rounded to nearest dollar)
Therefore, the best choice is C, with a final balance of $13,181.

How Much Will You Have in a Savings Account in Ten