You plan to deposit $1,700 per year for 5 years into a money market account with an annual return of 2%. You plan to make your first deposit one year from today.

You plan to deposit $1,700 per year for 5 years into a money market account with an annual return of 2%. You plan to make your first deposit one year from today.

a. What amount will be in your account at the end of 5 years? Round your answer to the nearest cent. Do not round intermediate calculations.

b. Assume that your deposits will begin today. What amount will be in your account after 5 years? Round your answer to the nearest cent. Do not round intermediate calculations.

 

 

answer:

a.      What amount will be in your account at the end of 5 years? Round your answer to the nearest cent. Do not round intermediate calculations.

FVA ordinary = A*[(1+r)^n-1]/r

= 1700*[(1+2%)^5-1]/.02

= $8,846.87

b. Assume that your deposits will begin today. What amount will be in your account after 5 years? Round your answer to the nearest cent. Do not round intermediate calculations.

FVA due = A*[(1+r)^n-1](1+r)/r

= 1700*[(1+2%)^5-1](1+2%)/.02

= $9,023.81

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