Question

Noma plans to save $3,200 per year for the next 25 years. If she can earn...

Noma plans to save $3,200 per year for the next 25 years. If she can earn an annual interest rate of 8.2 percent, how much will she have in 25 years?

Multiple Choice

  • $224,826.11

  • $240,885.11

  • $260,637.69

  • $80,000.00

  • $230,411.85

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Homework Answers

Answer #1

Please find the below explanation and “ Don’t forget to give a like! Thank you”

We will use Annuity formula

FV of an annuity = P [(1+ r)n – 1 / r ]

FV = Future value

P = periodic payment = $3200

r = interest rate = 8.2% or 0.082

n = number of periods = 25 years

By applying the formula

FV = $3200[(1+0.082)25 – 1 / 0.082 ]

= $3200[(1.082)25 – 1 / 0.082 ]

= $3200[ 7.172681 – 1 / 0.082 ]

= $3200[ 6.172681 / 0.082 ]

= $3200[75.276597]

= $240885.11

Noma will save $240885.11 in 25 years.

The answer is $240885.11

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