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 amount he will have at the end of the six years? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

We can solve this problem by using the formula for future value of an annuity:

FV = PMT x [(1 + r)^n - 1] / r

where:

PMT = the periodic payment
r = the interest rate per period
n = the number of periods

In this case, PMT = $3,500, r = 13% per year, and n = 6 years.

Substituting these values into the formula, we get:

FV = $3,500 x [(1 + 0.13)^6 - 1] / 0.13
FV = $29,129.15 (rounded to the nearest dollar)

Therefore, Lloyd will have $29,129 at the end of 6 years. Option B, $29,129, is the best choice.

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