Ask Question
12 June, 20:31

How do I solve this?

Jacob is saving up for a down payment on a car. He plans to invest $2,000 at the end of every year for 5 years. If the interest rate on the account is 2.25% compounding annually, what is the present value of the investment?

a. $5,666.58

b. $10,461.24

c. $9,358.91

d. $37,731.88

+1
Answers (1)
  1. 12 June, 22:28
    0
    To compute the value of investment in 5 years. We use compounded annually equation. And add 2000 Yearly to the compounded value

    A = P * (1 + (r/n)) ^ (n*t)

    A = total amount = Unknown

    P = principal or amount of money deposited, = 2000 usd

    r = annual interest rate = 2.25%

    n = number of times compounded per year = 1

    t = time in years = 5

    Solution

    Year1 : A1 = 2000 * (1 + (0.025/1)) ^ (1*1) = 2045

    Year2 : A2 = (2000+2045) * (1 + (0.025/1)) ^ (1*1) = 4136.01

    Year3 : A3 = (2000 + 4136.01)) * (1 + (0.025/1)) ^ (1*1) = 6274.07

    Year4 : A4 = (2000+6274.07)) * (1 + (0.025/1)) ^ (1*1) = 8460.24

    Year5 : A5 = (2000+8460.24)) * (1 + (0.025/1)) ^ (1*1) = 1 0695.6
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “How do I solve this? Jacob is saving up for a down payment on a car. He plans to invest $2,000 at the end of every year for 5 years. If the ...” in 📙 Mathematics if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers