Question

How much money will you have in a savings account that earns 12% annually in 10 years if you invest $5000 per year?

Answer 1

FV of Annuity :
Annuity is series of cash flows that are deposited at regular intervals for specific period of time.

FV of Annuity = CF [ (1+r)^n - 1 ] / r
r - Int rate per period
n - No. of periods

Particulars	Amount
Cash Flow	$      5,000.00
Int Rate	12.000%
Periods	10

FV of Annuity = Cash Flow * [ [ ( 1 + r ) ^ n ] - 1 ] /r
= $ 5000 * [ [ ( 1 + 0.12 ) ^ 10 ] - 1 ] / 0.12
= $ 5000 * [ [ ( 1.12 ) ^ 10 ] - 1 ] / 0.12
= $ 5000 * [ [3.1058] - 1 ] / 0.12
= $ 5000 * [2.1058] /0.12
= $ 87743.68

Amount in savings account after 10 Years is $ 87743.68

Pls comment, if any further assistance is required.