Luana loves shopping for clothes, but considering the state of the economy, she has decided to start saving. At the end of each year, she will deposit $1,790 in her local bank, which pays her 11% annual interest. Luana decides that she will continue to do this for the next eight years. How much will she save by the end of eight years?

Question

Mathematics

Shepard

29 September, 10:53

Luana loves shopping for clothes, but considering the state of the economy, she has decided to start saving. At the end of each year, she will deposit $1,790 in her local bank, which pays her 11% annual interest. Luana decides that she will continue to do this for the next eight years. How much will she save by the end of eight years?

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Answers (1)

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Evelin Buck · Answer 1

Answer: $2,493.522

Step-by-step explanation:

Given:

Luana will deposit $570 every year for 4 years. This is an annuity as same amount is deposited every year.

Rate is 6% or 0.06

We have to compute Luana's savings at the end of 4th year.

Refer future value of annuity factor table at 6%, 4th year. Annuity factor is 4.3746.

Savings = Yearly deposit * Annuity factor

= 570 * 4.3746

= $2,493.522

Therefore, Luana will save $2,493.522 by the end of 4 years.