You are saving money for the down payment on a house.If you can save $7,500 per year for the next five years at an interest rate of 8%,how much will you have saved at the end of five years?
A)$40,500
B)$37,500
C)$44,000
D)$29,945
E)$93,750

Question

Quizplus · Accepted Answer

This is a compound interest problem where you save $7,500 annually at an 8% interest rate for 5 years. Using the future value of a series formula: FV = P * [(1 + r)^n - 1] / r, where P = annual payment, r = annual interest rate, n = number of years, we calculate the future value of these annual savings. Plugging in the values: FV = 7500 * [(1 + 0.08)^5 - 1] / 0.08, we get approximately $44,000.

You Are Saving Money for the Down Payment on a House.If