Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first $5,000 is invested at the end of the first year.

Answer 1

1. $5000 @ end of first yr.

2. 5000*1.1 + 5000=10500 @ end of 2nd yr.

3. 10500*1.1 + 5000 = 16,550. @ end of 3rd yr.

4. 16,550*1.1 + 5000 = 23,205 @ end of
fourth yr.

5. 23,205*1.1 + 5000 = 30,525.50 @ end
of 5th yr.

6. 30,525.50*1.1 + 5000 = $38,578.05 @
end of 6th yr.