Mr. Blochirt is creating a college investment fund for his daughter. He will put in $7,000...
Mr. Blochirt is creating a college investment fund for his daughter. He will put in $7,000 per year for the next 17 years and expects to earn a 12% annual rate of return. How much money will his daughter have when she starts college?
330162
331175
342915
342188
Homework Answers
Future Value of an Ordinary Annuity
Here, we’ve annual payment (P) = $7,000 per year
Annual interest rate (r) = 12.00% per year
Number of periods (n) = 17 Years
Therefore, Future Value of an Ordinary Annuity = P x [{(1+ r)n - 1} / r ]
= $7,000 x [{(1 + 0.12)17 - 1} / 0.12]
= $7,000 x [(6.866040888 – 1) / 0.12]
= $7,000 x [5.866040888 / 0.12]
= $7,000 x 48.88367407
= $342,188
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