Lloyd Harris is planning to invest $3,500 every year for the next six years in an investment paying 13 percent annually. What will be the total amount he will have at the end of the six years? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

This is a case of annuity with annual payments. The future value of an annuity formula can be used to find the total amount Lloyd will have at the end of the six years:
FV = PMT x [((1+r)^n - 1)/r]
Where:
PMT = $3,500 (the amount invested annually)
r = 13% (the annual interest rate as a decimal)
n = 6 (the number of years)
Using the formula, we get:
FV = $3,500 x [((1+0.13)^6 - 1)/0.13] = $29,129
Therefore, the best choice is B, with a total amount of $29,129 at the end of the six years.

Lloyd Harris Is Planning to Invest $3,500 Every Year for the Next