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19 April, 13:57

You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 8.5% per year. Under these conditions, how much will you have just after you make the 5th deposit, 5 years from now?

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  1. 19 April, 14:21
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    you have just after you make the 5th deposit is $18369

    Explanation:

    Given data

    time t = 5 year

    principal p = $3100

    rate r = 8.5% = 0.085

    to find out

    how much you have just after you make the 5th deposit

    solution

    we will apply here future value formula that is

    Future value = principal (1 + rate) ^5 - 1 / rate

    put all value here

    Future value = principal (1 + rate) ^5 - 1 / rate

    Future value = 3100 (1 + 0.085) ^5 - 1 / 0.085

    Future value = 18368.66

    you have just after you make the 5th deposit is $18369
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