Multiple choice

An individual deposits $10,000 at the beginning of each of the next 10 years, starting today, into an account paying 9 percent interest compounded annually. The amount of money in the account at the end of 10 years will be closest to:

  1. $109,000
  2. $143,200
  3. $151,900
  4. $165,600
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is an annuity due. Future Value = P * [((1+r)^n - 1) / r] * (1+r) = 10000 * [((1.09)^10 - 1) / 0.09] * 1.09 = 10000 * [1.36736 / 0.09] * 1.09 = 10000 * 15.1929 * 1.09 = 165603.