Xiang invests $25,000 per year,starting in one year,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

This is a case of annuity due where Xiang invests at the beginning of each year for 20 years. Using the formula for future value of annuity due, FV = C[((1+r)^n - 1)/r]*(1+r), where C is the annual payment, r is the interest rate, and n is the number of years, we can calculate the future value of Xiang's investment to be FV = $1,024,887.31.

Xiang Invests $25,000 Per Year,starting in One Year,for 20 Years