You want to open a sushi bar 3 years from now, and you plan to save $7,000 per year, beginning immediately.You will make 3 deposits in an account that pays 5.2% interest.Under these assumptions, how much will you have 3 years from today?
A) $20,993
B) $22,098
C) $23,261
D) $24,424
E) $25,645

Question

Quizplus · Accepted Answer

We can solve this problem using the formula for future value of an annuity with regular deposits:

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

Where:
PMT = Annual deposit = $7,000 
r = Interest rate per period = 5.2% / 3 = 1.733%
n = Number of periods = 3

Plugging in these values, we get:

FV = $7,000 x ((1 + 0.01733)^3 - 1) / 0.01733 
FV = $23,261

Therefore, you will have $23,261 in the account after 3 years. The closest answer choice is C.

You Want to Open a Sushi Bar 3 Years from Now