An individual is planning to set-up an education fund for her daughter. She plans to invest $7,000 annually at the end of each year. She expects to withdraw money from the fund at the end of 9 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 9 years? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.) A) $50,400 B) $45,360 C) $87,413 D) $126,000 E) $68,040

Question

Quizplus · Accepted Answer

Using the formula for future value of an annuity:
FV = PMT x [(1 + i)^n - 1] / i
where PMT is the annual payment, i is the interest rate per period, and n is the number of periods.

FV = $7,000 x [(1 + 0.08)^9 - 1] / 0.08
FV = $7,000 x 15.84893
FV = $110,942.51

Therefore, the total value of the fund at the end of 9 years is $110,942.51.

An Individual Is Planning to Set-Up an Education Fund for Her