Question

You deposit $3000 each year into an account earning 6% interest compounded annually. How much will you have in the account in 35 years?

Answer 1

We can use the future value of annuity formula to calculate the total amount in the account in 35 years.
The formula is as under,
FV of annuity = P*{[(1+r)^n - 1]/r}
FV of annuity = future value of annuity = ?
P = Periodic payment i.e.yearly deposit = $3000
r = rate of interest per annum = 6%
n = number of years = 35
FV of annuity = 3000*{[(1+0.06)^35 - 1]/0.06}
FV of annuity = 3000*111.4348
FV of annuity = 334304.34
The total amount you have in the account in 35 years is $3,34,304.34