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You want to purchase a motorcycle 4 years from now, and you plan to save $6,200...

You want to purchase a motorcycle 4 years from now, and you plan to save $6,200 per year, beginning immediately. You will make 6 deposits in an account that pays 4.5% interest. Under these assumptions, how much will you have 6 years from today?

Please show all work. Thank you.

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Answer #1

The amount 6 years from today will be the future value of the annual payment made at the beginning of each year.

Future value of the annuity(due) is calculated using following equation

FVA(due) = ​​​​​​

Where, A is annual payment

r is interest rate

n is number of years

Therefore, FVA(due) =

=

=

= 43518.74

Therefore, the amount one wll have 6 years from today = $43518.74

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