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Robert and Linda Williams plan to invest $11,000 a year in an educational IRA for their granddaughter, Sloane Martin. They will make these deposits on January 2nd of each year. Robert and Linda feel they can safely earn 6%. How much will be in this account on December 31 of the 18th year?

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Answer:

FV= $339,962.18

Explanation:

Giving the following information:

Annual investment (A)= $11,000

Number of periods (n)= 18 years

Interest rate (i)= 6%

To calculate the future value (FV) after 18 years, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {11,000*[(1.06^18) - 1]} / 0.06

FV= $339,962.18

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