Question

How do I solve these problems? Thanks!
4.LO1-6 Tony plans to deposit $1,000 at the end of each of the next three years. If his funds earn 5% compounded annually, how much will he have at the end of three years? O A. $3,150.00 OB. $3,175.50 O C. $4,310.10 OD. $3,152.50 O E. $3,500.00

Answer 1

1.Information provided:

Annual deposit= $1,000

Time= 3 years

Interest rate= 5%

The question is solved by computing the future value.

Enter the below in a financial calculator to compute the future value:

PMT= 1,000

N= 3

I/Y= 5

Press the CPT key and FV to compute the future value.

The value obtained is 3,152.50.

Therefore, he will have $3,152.50 at the end of three years.

Hence, the answer is option d.

2. Information provided:

Future value= $1,500,000

Time= 30 years

Interest rate= 8%

The amount of annual deposit is computed by entering the below in a financial calculator:

FV= 1,500,000

N= 30

I/Y= 8

Press the CPT key and PMT to compute the amount of annual deposit.

The value obtained is 13,241.15.

Therefore, $13,241.15 must be deposited every year.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.