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# Contributing money to an investment account - house purchase

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You are contributing money to an investment account so that you can purchase a house in five years. You plan to contribute six payments of \$3,000 a year. The first payment will be made today (t = 0) and the final payment will be made five years from now (t = 5). If you earn 11 percent in your investment account, how much money will you have in the account five years from now (at t = 5)?

a. \$19,412
b. \$20,856
c. \$21,683
d. \$23,739
e. \$26,350

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#### Solution Preview

Answer: D

The total value 5 years from now will be:
\$3,000 * (1.11)^5 + \$3,000 * (1.11)^4 + \$3,000 * ...

#### Solution Summary

This solution analyzes the amount of money available to purchase a house five years from now.

\$2.49