Assuming an 8% interest rate,the dollar amount available on June 1,2016,resulting from 7 annual deposits of $3,500 each with the first deposit made on June 1,2010,is:
A)$18,222.40
B)$31,229.81
C)$41,988.10
D)$30,498.30

Question

Quizplus · Accepted Answer

The future value of an annuity is the sum of the present values of each of the individual payments. The present value of each payment is the payment amount divided by (1 + r)^n, where r is the interest rate and n is the number of years from the payment date to the future value date. In this case, the interest rate is 8% and the number of years from the first payment date to the future value date is 6. Therefore, the present value of each payment is $3,500 / (1 + 0.08)^6 = $2,613.36. The future value of the annuity is the sum of the present values of each of the payments, which is $2,613.36 * 7 = $18,293.52.

Assuming an 8% Interest Rate,the Dollar Amount Available on June