Question

The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make annual deposits of $100,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 7% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030?

Answer 1

Answer:

Fund balance at December 31th, 2030 $ 1,381,644.80

Explanation:

We should calculate the future value of a 10-years annuity of 100,000 at 7% interest rate:

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

C 100,000

time 10 years

rate 7% = 7/100 = 0.07

$100000 \times \frac{(1+0.07)^{10} -1}{0.07} = FV$

FV $1,381,644.7961