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In an attempt to have funds for a down payment in six years, James Dupont plans to save $3,650 a year for the next six years. With an interest rate of 5 percent, what amount will James have available for a down payment after the six years

Respuesta :

Answer:

$24,820

Explanation:

Given:

Periodic amount = $3,650

Number of period = 6

Interest rate = 5% = 5/100 = 0.05

Future value of annuity = ?

Computation of Future value of annuity :

[tex]Future \ value = Pmt[\frac{(1+r)^n-1}{r} ]\\\\Future \ value = 3,650[\frac{(1+0.05)^6-1}{0.05} ]\\\\Future \ value = 3,650[\frac{(1.05)^6-1}{0.05} ]\\\\Future \ value = 3,650[\frac{1.34-1}{0.05} ]\\\\Future \ value = 3,650[\frac{0.34}{0.05} ]\\\\Future \ value = 3,650[6.8]\\\\Future \ value = 24,820\\\\[/tex]

Therefore, future value is $24,820

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