Xiang invests $25,000 per year,starting today,for 20 years at an interest rate of 7%.What is the value of the investment at the end of the 20 years?
A) $1,096,629.42
B) $1,024,887.31
C) $283,389.88
D) $264,850.36

Question

Quizplus · Accepted Answer

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

FV = PMT * ((1 + r)^n - 1) / r

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

Plugging in the values we get:

FV = 25000 * ((1 + 0.07)^20 - 1) / 0.07
FV = $1,096,629.42

Therefore, the best choice is A.

Xiang Invests $25,000 Per Year,starting Today,for 20 Years at an Interest