If $10,000 is received and deposited at 10% at the end of each of the next six years, how much will be in the account after the last payment is deposited?

A) $96,000
B) $77,156
C) $43,553
D) $87,355

Question

If $10,000 is received and deposited at 10% at the end of each of the next six years, how much will be in the account after the last payment is deposited?A) $96,000B) $77,156C) $43,553D) $87,355

Dhivya Shree R · Accepted Answer

Final Answer : B, Explanation :  This problem requires the use of compound interest. Since $10,000 is being deposited at the end of each year, we can use the future value formula for an annuity:$FV = PMT\left[\frac{(1 + r)^n - 1}{r}\right]$where FV is the future value, PMT is the payment, r is the interest rate per period, and n is the number of periods.Plugging in our values, we get:$FV = 10,000\left[\frac{(1 + 0.10)^6 - 1}{0.10}\right] =$77,156Therefore, the final amount in the account after the last payment is deposited will be $77,156. The answer is B.

If $10,000 is received and deposited at 10% at the end of each of the next six years, how much will be in the account after the last payment is deposited?

A) $96,000
B) $77,156
C) $43,553
D) $87,355

Definitions

Learning Objectives

Learning Objectives

Related questions