Question

Jamie Lee needs to save a total of $9,000 in order to get started in her cupcake café venture. She presently deposited $1,800 a year in a regular savings account. Calculate the future value of these deposits.

Scenario is 5 years, and the interest rate is 2%

Answer 1

We are given,

Interest rate(r) = 2%

Time(t) = 5 years

Annual deposits = $1,800

Amount required = $9,000

Future value = ?

We can future value using a financial calculator or by using excel,

Time	5
rate	2%
pmt	1800
Future value	$9,367.27	(=PV(2%,5,-1800,0,0))

She will have $9,367.27 after 5 years(which is greater than 9,000), so she can start her cup cake cafe venture after 5 years.

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