Question

Present and future value tables of $1 at 3% are presented below: N 1 2 3 4 FV $1 1.03000 1.06090 1.09273 1.12551 1.15927 1.19405 1.22987 1.26677 1.30477 1.34392 1.38423 Ju 100 PV $1 0.97087 0.94260 0.91514 0.88849 0.86261 0.83748 0.81309 0.78941 0.76642 0.74409 0.72242 FVA $1 1.0000 2.0300 3.0909 4.1836 5.3091 6.4684 7.6625 8.8923 10.1591 11.4639 12.8078 PVA $1 0.97087 1.91347 2.82861 3.71710 4.57971 5.41719 6.23028 7.01969 7.78611 8.53020 9.25262 FVAD $1 1.0300 2.0909 3.1836 4.3091 5.4684 6.6625 7.9923 9.1591 10.4639 11.8078 13.1920 6 PVAD $1 1.00000 1.97087 2.91347 3.82861 4.71710 5,57971 6.41719 7.23028 8.01969 8.78611 9.53020 10.25262 7 9 10 11 12 1.42576 0.70138 14.1920 9.95400 14.6178 10.95400 13 1.46853 0.68095 15.6178 10.63496 16.0863 14 15 16 1.51259 1.55797 1.60471 0.66112 0.64186 0.62317 17.0863 18.5989 20.1569 11.29607 11.93794 12.56110 17.5989 19.1569 20.7616 11.63496 12.29607 12.93794 Sondra deposits $3,300 in an IRA account on April 15, 2016. Assume the account will earn 3% annually. If she repeats this for the next 7 years, how much will she have on deposit on April 14, 2023? Multiple Choice < Prev 7 of 9 Next > BOOK PRO F6

Answer 1

Based on the information available in the question, we can answer as follows:-

Sudha deposits $3,300 into an IRA account for 7 years. The amount that will be available in the account after 7 years is calculated as :-

FVIFA = $3,300 * FVAD(7 years, 3%)

We use the Future value of annuity due table because the first instalment of $3,300 is made immediately and not after one year.

Future Value = $3,300 * 7.8923

Future Value = $26,044.59

Future Value = $26,045(Rounded)

Based on the above calculation, the correct answer is Option C - $26,045.

Option A, Option B and Option D are incorrect based on the above calculations.

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