Mrs.Smith makes 20 annual deposits of $2000 into a retirement savings account,first deposit made today.If she earns j₁ = 5% on her money,how much does she have 25 years from today? A)$66,131.91 B)$84,402.94 C)$88,623.08 D)$95,454.20

Question

Quizplus · Accepted Answer

To solve this problem, we can use the formula for future value of an annuity:

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

where:

FV = future value
Pmt = payment (in this case, $2000)
r = annual interest rate (in this case, 5%)
n = number of times interest is compounded per year (in this case, once per year)
t = number of years (in this case, 25)

Plugging in the values, we get:

FV = 2000 * (((1 + 0.05/1)^(1*20)) - 1) / (0.05/1)
FV = $88,623.08

Therefore, the best choice is C, with a future value of $88,623.08.

MrsSmith Makes 20 Annual Deposits of $2000 into a Retirement