Question

An individual is planning to set-up an education fund for her daughter. She plans to invest $7,700 annually at the end of each year. She expects to withdraw money from the fund at the end of 9 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 9 years

Answer 1

Answer:

$96,154.20

Explanation:

We are to find the future value of the annuity

The formula for calculating future value = A (B / r)

B = [(1 + r)^n] - 1  

A = Amount

R = interest rate  

N = number of years

[(1.08)^9 - 1 ] / 0.08 = 12.487558

12.487558 x $7,700 = $96,154.20