You are saving money for a down payment on a new house. You intend to place $5,000 at the end of each year for three years into an account earning 6% per year. At the end of the fourth year, you will place $10,000 into this account
How much money will be in the account at the end of the fourth year?
A) $26,873.08
B) $26,518.17
C) $25,918.00
D) $25,000.00
Answer: A
Explanation: A) FV = CF × + FV = $5,000 × + $5,000 = $26,873.08.
MODE = END
INPUT 4 6 0 -5,000 ?
KEY N I/Y PV PMT FV
CPT 21,873.08
Then, $21,873.08 + $5,000.00 = $26,873.08.
In this equation I split the $10,000 final payment into two $5,000 payments so that I could use a four-year future value of a $5,000 annuity formula to go along with the last cash flow.
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