An investor plans to save $1000 per year for the next ten years as a retirement fund,and expects to earn 8.4% per annum,compounded monthly over the period,on all invested funds.How much will the investor have at the end of ten years?
A) $187 085.48
B) $296 035.24
C) $126 882.77
D) $153 178.10

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of an annuity can be calculated using the formula: FV = P * ((1 + r/n)^(n*t) - 1) / (r/n), where P is the annual payment, r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, P = $1000, r = 8.4%, n = 12 (since the interest is compounded monthly), and t = 10. Plugging these values into the formula, we get FV = $187,085.48.

An Investor Plans to Save $1000 Per Year for the Next