I need some help with this question please You want to buy a condo 5 years from

Question

I need some help with this question please

You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginning one year from today. You will deposit the money in an account that pays 6% interest. How much will you have just after you make the 5th deposit, 5 years from now? $14,764.40 $13,431.83 $16,911.28 $17,843.15 $15,119.76 You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginning immediately. You will make 5 deposits in an account that pays 6% interest. Under these assumptions, how much will you have 5 years from today? $16,110.34 $17,925.96 $17,513.68 $15,976.84 $18,349.15

Explanation / Answer

For ordinary annuity, (the first question)

Future Value = Payments X ( (1+rate)^(number of periods) -1) / rate)

Future Value = $3000 X ( (1.06^5)-1 / .06) = $16,911.28 which is C

For annuity due (the 2nd question), you add one more thing of interest

Future Value = FV ordinary X (1+rate)

Future Value = $16,911.28 X (1.06) = $17,925.96 which is B

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