Question

Javier is currently paying ​$1 comma 200 in interest on his credit cards annually.​ If, instead of paying​ interest, he saved this amount every​ year, how much would he accumulate in a​ tax-deferred account earning 9 percent over 9​, 14​, or 19 ​years?

Answer 1

Answer:

after 9 years:

FV $15,625.2437

in 14 years:

FV $31,223.0270

last, at the nineteenth year:

FV $55,222.1501

Explanation:

We have to solve for the annuity of 1,200 dollar with a yield of 9% at the proposed times:

$C \times \frac{(1+r)^{time}-1 }{rate} = FV$

C 1,200.00

time 9

rate 0.09

$1200 \times \frac{(1+0.09)^{9} -1}{0.09} = FV$

FV $15,625.2437

time = 14

$1200 \times \frac{(1+0.09)^{14}-1 }{0.09} = FV$

FV $31,223.0270

time = 19

$1200 \times \frac{(1+0.09)^{19} -1}{0.09} = FV$

FV $55,222.1501