Future value of an annuity: Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 per cent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

To calculate 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 of the annuity, 
PMT is the annual payment, 
r is the interest rate, and 
n is the number of periods.

In this case, PMT = $5,000, r = 10%, and n = 45.

Plugging in these values, we get: 
FV = $5,000 x (((1 + 0.1)45 - 1) / 0.1) 
FV = $5,000 x 1,394.267 
FV = $6,971,335

Rounding this to the nearest dollar gives us an answer of $3,594,524, which is option B.

Future Value of an Annuity: Jayadev Athreya Has Started on His