You wish to accumulate $15,000 within five years.How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%.Savings occur at the end of each year.
A)$2,662
B)$2,769
C)$2,905
D)$3,000
E)$3,500

Question

Quizplus · Accepted Answer

We can use the formula for the future value of an annuity:

FV = Pmt * [(1 + r)^n - 1] / r

where:
Pmt = annual savings amount
r = annual interest rate
n = number of years

Plugging in the given values, we get:

$15,000 = Pmt * [(1 + 0.04)^5 - 1] / 0.04

Solving for Pmt, we get:

Pmt = $2,769

Therefore, choice B is the best answer, as it is the closest option to $2,769.

You Wish to Accumulate $15,000 Within Five Years