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Mr
Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn a 8% annual rate of return. How much money will his daughter have when she starts college?
A) $11,250 B) $12,263 C) $24,003 D) $23,079
Expert Solution
Here we have to find out the compounded value of annuity
F=A*((1+r)^n-1)/r
F=Future value, A= Annuity r= rate of interest n=duration
A= 850, r=8%, n=15
=850*((1+0.08)^15-1)/0.08 =23079.30
Thus answer is D) $23079
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