Question

Your department at work places $10,000 every year-end into an account earning 5%. The money is used when the corporate office fails to fully finance your profitable projects. The money has not been touched since a first deposit was made exactly six years ago. If the most recent deposit was made today, how much money is currently in the account?
A) $55,256.31
B) $68,019.13
C) $81,420.08
D) $60,000

Answer 1

Answer:

68,019.13

Explanation:

this particular question can be solved, using an approach by the annuity concept, remember that an annuity is usefull for calculating the present or future value of a series of regular payments, so in this case we are asked to calculate the future value as follows:

$s_{n} =P*\frac{(1+i)^{n}-1 }{i}$

where $s_{n}$ is the future value of the annuity, $i$ is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid. so applying to this particular problem, we have:

$s_{6} =10,000*\frac{(1+0.05)^{6}-1 }{0.05}$

$s_{6} =68,019.13$