document.write( "Question 1148895: You deposit $5000 at the beginning of each year into an account earning 7% interest compounded annually. How much will you have in the account in 25 years? \n" ); document.write( "

Algebra.Com's Answer #770216 by ikleyn(52779) $\"\"$ $\"About$

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document.write( "It is a classic Ordinary Annuity saving plan. The general formula is \r\n" );
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document.write( "    FV = ,    (1)\r\n" );
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document.write( "where  FV is the future value of the account;  P is your annual payment (deposit); r is the annual percentage rate presented as a decimal; \r\n" );
document.write( "n is the number of deposits (= the number of years, in this case).\r\n" );
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document.write( "Under the given conditions, P = 5000;  r = 0.07;  n = 25.  So, according to the formula (1), you get at the end of the 25-th year\r\n" );
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document.write( "    FV =  = $316,245.20.\r\n" );
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document.write( "Note that you deposit only  25*$5000 = $125,000.  The rest is what the account earns/accumulates in 25 years.\r\n" );
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\n" ); document.write( "\n" ); document.write( "On Ordinary Annuity saving plans, see the lessons\r
\n" ); document.write( "\n" ); document.write( " - Ordinary Annuity saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( " - Solved problems on Ordinary Annuity saving plans\r
\n" ); document.write( "\n" ); document.write( "in this site.\r
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\n" ); document.write( "\n" ); document.write( "The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.\r
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\n" ); document.write( "\n" ); document.write( "When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.\r
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