To pay for her college education, Gina is saving $2,000 at the beginning of each year for the nexteight years in a bank account paying 12 percent interest. How much will Gina have in that accountat the end of 8th year?

Question

Quizplus · Accepted Answer

To calculate the amount of money Gina will have in the account at the end of the 8th year, we can use the formula for future value of an annuity:

FV = Pmt x ( (1 + r)^n - 1 ) / r

Where:
Pmt = the amount of the annual payment = $2,000
r = the annual interest rate = 12% = 0.12
n = the number of years the payments are made = 8

Plugging in these values, we get:

FV = $2,000 x ( (1 + 0.12)^8 - 1 ) / 0.12
FV = $27,552

Therefore, Gina will have $27,552 in the account at the end of the 8th year, which is option B.

To Pay for Her College Education, Gina Is Saving $2,000