You can earn 10%.If you hope to accumulate $20,000 in 4 years,you must make annual investments (end of period)of $3,918.

Question

Quizplus · Accepted Answer

To determine if the annual investment amount of $3,918 is correct for accumulating $20,000 in 4 years at a 10% annual interest rate, we can use the future value of an annuity formula: $FV = P \times \left( \frac{(1 + r)^n - 1}{r} \right)$, where $FV$ is the future value, $P$ is the annual payment, $r$ is the annual interest rate, and $n$ is the number of periods (years). Rearranging the formula to solve for $P$ gives us $P = \frac{FV}{\left( \frac{(1 + r)^n - 1}{r} \right)}$. Plugging in the values ($FV = 20,000$, $r = 0.10$, $n = 4$) does not yield exactly $3,918, indicating the statement is false.

You Can Earn 10