question archive Dr Ruth has been secretly depositing $2,500 in her savings account every December starting in 1999
Dr Ruth has been secretly depositing $2,500 in her savings account every December starting in 1999
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Dr Ruth has been secretly depositing $2,500 in her savings account every December starting in 1999. Her account earns 5 percent compounded annually. How much will she have in December 2008? (Assume that a deposit is made in the year 2008.) Make sure to carefully count the years.
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Here annuity = 2500
n = no of years = 10 years
r = rate of interest = 5%
FV(annuity) = Annuity [(1+r)^n - 1 /r]
= 2500 [(1+5%)^10 - 1 / 5%]
= 2500 [(1.05)^10 - 1 /0.05]
= 2500 [1.628894 - 1 / 0.05]
= 2500 [ 0.628894 / 0.05]
= 2500 x 12.58
= 31444.73 $
Thus she will have $ 31444.73 at end of december 2008
