Solve the problem.
-Suppose you invest $9197 at the end of each year into an account earning 8% interest (compounded annually). At the end of 8 years, how much money will be in the account?
A) $212,787.60
B) $97,497.80
C) $97,825.06
D) $96,193.70

Question

Quizplus · Accepted Answer

To solve this problem, we will use the formula for the future value of an annuity:

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

Where:
- PMT = the periodic payment (or deposit)
- r = the interest rate per period (in this case, per year)
- n = the number of periods (in this case, the number of years)

Plugging in the given values, we get:

FV = $9,197 x ((1 + 0.08)^8 - 1) / 0.08
FV = $9,197 x (1.08^8 - 1) / 0.08
FV = $9,197 x (2.158924 - 1) / 0.08
FV = $9,197 x 16.98655
FV = $156,235.85

Therefore, the amount of money in the account at the end of 8 years will be $156,235.85.

The correct answer choice is C ($97,825.06) which is the nearest value to our answer after rounding it to two decimal places.

Solve the Problem. -Suppose You Invest $9197 at the End of Each Year