If $10,000 is received and deposited at 10% at the end of each of the next six years, how much will be in the account after the last payment is deposited?
A)$96,000
B)$77,156
C)$43,553
D)$87,355

Question

Quizplus · Accepted Answer

This problem requires the use of compound interest. Since $10,000 is being deposited at the end of each year, we can use the future value formula for an annuity:

$FV = PMT\left[\frac{(1 + r)^n - 1}{r}\right]$

where FV is the future value, PMT is the payment, r is the interest rate per period, and n is the number of periods.

Plugging in our values, we get:

$FV = 10,000\left[\frac{(1 + 0.10)^6 - 1}{0.10}\right] =$77,156

Therefore, the final amount in the account after the last payment is deposited will be $77,156. The answer is B.

If $10,000 Is Received and Deposited at 10% at the End