Question

1.

If you can save $1000 per year for the next six years in an account earning 10 percent per year. How much will you have at the end of the sixth year?

Group of answer choices

$7,715.61

$7,615.61

$7,515.61

$7,815.61

2. Suppose you borrow $20,000 and then repay the loan by making 12 monthly payments of $1,200 each. What rate will you be quoted on the loan?

Answer 1

Question 1

Amount saved every year = $1,000

Interest rate = 10%

Time period = 6 years

Calculate the Future Worth -

FW = Amount saved every year (F/A, i, n)

FW = $1,000(F/A, 10%, 6)

FW = $1,000 * 7.71561

FW = $7,715.61

The amount in account at the end of sixth year is $7,715.61

Hence, the correct answer is the option (A).