Assume that you invest $1250 at the end of each of the next 15 years in a mutual fund. You currently have $10,000 in the mutual fund. The annual rate of interest that you expect to earn in this account is 4.35 percent. The amount in the account at the end of 15 years is
A) $58,940.30.
B) $28,750.00.
C) $37,009.35.
D) $44,630.81.
E) $25,690.50.

Question

Quizplus · Accepted Answer

First, we must calculate the value of the current $10,000 in the mutual fund after 15 years:

10,000 * (1 + 0.0435)^15 = $18,296.37

Next, we must calculate the future value of the $1,250 annual investments for 15 years:

FV = 1,250 * ((1 + 0.0435)^15 - 1) / 0.0435 = $24,334.44

Finally, we add the two values together to get the total amount in the account after 15 years:

18,296.37 + 24,334.44 = $42,630.81

Therefore, the correct answer is D, $44,630.81, which is the closest to the calculated value of $42,630.81.

Assume That You Invest $1250 at the End of Each