If you save 5000 per year for 10 years and earn 4 percent pe

If you save $5,000 per year for 10 years and earn 4 percent per year, how much would you have at the end of 10 years?

Solution

Present Value = $ 5,000 * 1/(1.04) ^ 1 +$ 5,000 * 1/(1.04) ^ 2 +$ 5,000 * 1/(1.04) ^ 3 +$ 5,000 * 1/(1.04) ^ 4+...$ 5,000 * 1/(1.04) ^ 10

= $ 40,554.48

Future Value = Present Value * ( 1+ Rate of Interest / 100) ^ Time

= $ 40,554.48 * ( 1+ 4/100) ^ 10

= $ 60,030.53725

Hence the correct answer is $ 60,030.54