Your great-uncle placed $500 a year in a bank account for your "college fund" for each of the last 18 years.How much is now in your college account (at the end of the eighteenth year)if your account earned an annual rate of return of 6%?
A)$15,452.83
B)$15,175.17
C)$16,427.17
D)$15,413.80
E)$15,546.18

Question

Quizplus · Accepted Answer

This is a problem involving the future value of a series of annuities. The formula to calculate the future value of an annuity is FV = P * [((1 + r)^n - 1) / r], where P is the payment amount, r is the annual interest rate, and n is the number of periods. Plugging in the values: P = $500, r = 0.06 (6%), and n = 18, we get FV = 500 * [((1 + 0.06)^18 - 1) / 0.06] = $15,452.83.

Your Great-Uncle Placed $500 a Year in a Bank Account