Sally will not be making any investments for five years as she is paying off student loans.In five years,she will make regular monthly investments,at the beginning of every month,in the amount of $350.She will make these investments for 25 years.What is the present value of her investment account assuming she can earn an annual return of 8.5%?
A)$229,725
B)$345,428
C)$519,405
D)$313,250

Question

Quizplus · Accepted Answer

The present value of an annuity can be calculated using the formula for the present value of an annuity due. The monthly interest rate is 8.5%/12, and the number of periods is 25*12. The present value is then discounted back 5 years to account for the delay in starting the investment.

Sally Will Not Be Making Any Investments for Five Years