If $10,000 per year is deposited at 8% starting today and at the beginning of each of the next five years (6 deposits) , the amount on deposit will be:

A) $46,229.
B) $73,359.
C) $49,927.
D) $79,228.

Question

If $10,000 per year is deposited at 8% starting today and at the beginning of each of the next five years (6 deposits) , the amount on deposit will be:A) $46,229.B) $73,359.C) $49,927.D) $79,228.

Skyler Corbett · Accepted Answer

Final Answer : D, Explanation :  Using the formula for the future value of an annuity due, we can calculate the total amount on deposit at the end of the six years:$FV = P\cdot\frac{(1 + r)^n-1}{r}\cdot(1+r) + P \cdot\frac{(1+r)^{n-1}-1}{r} FV = 10,000\cdot\frac{(1+0.08)^6-1}{0.08}\cdot1.08 + 10,000\cdot\frac{(1+0.08)^5-1}{0.08} FV = 79,228.29$Therefore, the best choice is (D), $79,228.

If $10,000 per year is deposited at 8% starting today and at the beginning of each of the next five years (6 deposits) , the amount on deposit will be:

A) $46,229.
B) $73,359.
C) $49,927.
D) $79,228.

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