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

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

FV = PMT * ((1 + r)^n - 1) / r

Where:
PMT = the periodic payment (in this case, $5,000)
r = the interest rate per period (in this case, 9% per year)
n = the number of periods (in this case, 5)

Plugging in the numbers, we get:

FV = $5,000 * ((1 + 0.09)^5 - 1) / 0.09
FV = $29,924.40

Therefore, the answer is B.

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