AnswersMathematics for Data and Financial LiteracyPractice ExamQuestion 37
37
practice examMultiple Choice

Practice Exam

Question 37 • Mathematics for Data and Financial Literacy

You invest in a sinking fund that pays an annual interest rate of 4% , and you make annual contributions of $⁢2,000 for 10 years. Using the formula for the future value of an annuity, F⁢V=P×(((1+r)^n−1)/(r)) , what is the future value of the fund?

Answer
A
29 dollars comma 778 point 2 0
B
26 dollars comma 489 point 6 0
C
24 dollars comma 012 point 2 1
D
32 dollars comma 000

Explanation

Substitute P = $2,000, r = 0.04, and n = 10 into the annuity formula: FV = 2,000 × ((1.04^10 − 1) ÷ 0.04). Since 1.04^10 is about 1.480244, the future value is about $24,012.21, which is choice C.

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