Bob has saved $585 each month for the last 4 years to make a down payment on a house. The account earned an interest rate of .44 percent per month. How much money is in Bob's account? Multiple Choice A. $29.833.38 B. $28,080.00 C. $30,113.95 D. $30,383.25 E. $31,189.44

Bob has saved $585 each month for the last 4 years to make a down payment on a house. The account earned an interest rate of .44 percent per month. How much money is in Bob's account? Multiple Choice A. $29.833.38 B. $28,080.00 C. $30,113.95 D. $30,383.25 E. $31,189.44

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Question

Bob has saved $585 each month for the last 4 years to make a down payment on a house. The account earned an
interest rate of .44 percent per month. How much money is in Bob's account?

Multiple Choice
A. $29.833.38
B. $28,080.00

C. $30,113.95
D. $30,383.25
E. $31,189.44

Expert Solution

Step 1 What is future value?

The future value of a cash flow series is the worth a cash flow will have if it earns a particular rate of interest.

Future value = $F V = C a s h f l o w \times (\frac{{(1 + r)}^{n} - 1}{r})$

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