If $15,000 is invested annually in an account with 9% interest compounding yearly, what will the balance of the account be after five years? Refer to the following Future Value table: Future value of annuity of $1:

Question

Quizplus · Accepted Answer

Using the Future Value table, the factor for an annuity of $1 at 9% for 5 years is 6.4177. Therefore, the balance of the account after 5 years would be:

$15,000 x 6.4177 = $96,265.50

However, this calculation doesn't take into account the fact that the $15,000 is invested annually. To account for this, we can use the formula for the future value of an annuity:

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

Where FV is the future value, PMT is the payment (in this case $15,000), r is the interest rate (in decimal form) and n is the number of periods (in this case 5).

Using this formula with an interest rate of 9%:

FV = $15,000 x ((1 + 0.09)^5 - 1) / 0.09 = $87,693.63

Adding this to the initial investment of $15,000 for each year, we get:

$87,693.63 + ($15,000 x 5) = $162,693.63

Therefore, the balance of the account after five years would be $162,693.63, which is closest to option C, $58,350.

If $15,000 Is Invested Annually in an Account with 9