CIMA BA1 · Chapter 13 · Question 10 of 10
A saver deposits $2,000 at the end of each year for five years in an account paying 5% a year compound interest. What is the balance immediately after the fifth deposit (to the nearest cent)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $11,051.26
Explanation
Future value of an annuity = A x ((1 + r)^n - 1) / r = 2,000 x (1.05^5 - 1) / 0.05 = 2,000 x 5.525631 = $11,051.26.
More The time value of money MCQs
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- Q5What is the present value of $4,000 received at the end of each year for five years, discounted at 10% a year (to the nearest cent)?
- Q6An investment will pay $3,000 a year in perpetuity, with the first payment received at the end of Year 3. If the discount rate is 6% a…