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Answer: Closest answer is: FVA $4,000 x [(1.04-1)/0.04
Explanation:
Because the deposit is constant and occurs every period, it is an annuity.
The formula for the future value of an annuity is:
= Annuity * ( (1 + rate)^number of periods - 1) / rate
Correct formula is therefore:
= 4,000 * ( ( 1 + 4%)⁵ - 1) 4%+
= 4,000 * ( 1.04⁵ - 1 ) / 0.04
Closest answer is: FVA $4,000 x [(1.04-1)/0.04