Problem

Julie receives a check for $5000 at the end of every year as part of an inheritance. She deposits it into an annuity at an annual rate of 2.8% compounded continuously. How much will her annuity be worth at the end of 6 years? Round your answer to the nearest dollar and do not use commas in the answer blank.
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Answer

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Answer

32212

Steps

Step 1 :Calculate the accumulated amount for each deposit using the formula A=Pert

Step 2 :Since the annual deposit is $5000, the annual rate is 2.8% or 0.028 as a decimal, and the time is 6 years, calculate the total amount for each year separately

Step 3 :For the first deposit, the time is 6 years, so the accumulated amount is 5000e0.0286

Step 4 :For the second deposit, the time is 5 years, so the accumulated amount is 5000e0.0285

Step 5 :Continue this process for each subsequent deposit, decreasing the time by 1 year each time, until the last deposit which is for 1 year

Step 6 :Sum up the accumulated amounts for all deposits to get the total amount at the end of 6 years

Step 7 :Round the final answer to the nearest dollar

Step 8 :32212

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