Kristen deposits $5,000 in the bank at the end of each year for five years.How much money will she have in the bank at the end of five years,assuming she will be earning 6% interest annually on her deposits? (Round to the nearest dollar).
A)$3,736
B)$6,691
C)$21,062
D)$28,186

Question

Quizplus · Accepted Answer

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

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

where:
PMT = the periodic payment
r = the interest rate
n = the number of periods

In this case, PMT = $5,000, r = 6%, and n = 5 (since Kristen is depositing money for five years). Plugging in these values, we get:

FV = $5,000 x [(1 + 0.06)^5 - 1] / 0.06
FV = $5,000 x 5.6371
FV = $28,185.50

Rounding to the nearest dollar, Kristen will have $28,186 in the bank at the end of five years. Therefore, the correct answer is D: $28,186.

Kristen Deposits $5,000 in the Bank at the End of Each