Claudine Corporation will deposit $5,000 into a money market account at the end of each year for the next five years.How much will accumulate by the end of the fifth and final payment if the account earns 9% interest?

Question

Quizplus · Accepted Answer

This problem involves calculating the future value of an annuity. We can use the formula FV = PMT x [(1 + r)^n - 1]/r, where FV is the future value, PMT is the payment amount, r is the interest rate per period, and n is the number of periods. In this case, PMT = $5,000, r = 9%, and n = 5. Plugging those values into the formula, we get:
FV = $5,000 x [(1 + 0.09)^5 - 1]/0.09
FV = $5,000 x 6.639
FV = $29,924. Therefore, the best choice is B.

Claudine Corporation Will Deposit $5,000 into a Money Market Account