Question

Suppose that you earned a​ bachelor's degree and now​ you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a​ master's degree. To achieve this​ goal, you deposit $ 4000 at the end of each year in an annuity that pays 7.5 % compounded annually.
a. How much will you have saved at the end of five years? (Do not round until the final answer. Then round to the nearest dollar as needed.)
b. Find the interest.

Answer 1

Answer:

A ) The Amount which will be saved after five years is $ 5742.4

B ) The compound Interest is $ 1742.4

Step-by-step explanation:

The Principal deposited at the end of each year = $ 4000

The rate of interest = 7.5 % compounded annually

The time period = 5 years

From compounded method :

Amount = principal × $(1+\dfrac{\textrm rate}{100})^{\textrm time}$

or, Amount = $ 4000 × $(1+\dfrac{\textrm 7.5}{100})^{\textrm 5}$

Or, Amount = $ 4000 × $(1.0075)^{5}$

or, Amount = $ 4000 × 1.4356

∴ Amount = $ 5742.4

A ) The Amount which will be saved after five years is $ 5742.4

B ) The compound Interest = Amount - principal

   Or, C I = $ 5742.4 - $ 4000 is $ 1742.4    Answer