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Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her $170 for this service. Over a period of 15 years, how much does Elaine gain from preparing her own tax return? Assume she can earn 6 percent on her savings.

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Answer:

$3,956.91

Explanation:

The future value of an annuity is determined by the following expression:

[tex]FV = P*(\frac{(1+r)^n-1}{r} )[/tex]

For annualdeposits of $170, at a 6 percent rate for 15 years, the future value is:

[tex]FV = 170*(\frac{(1+0.06)^{15}-1}{0.06})\\FV =\$3,956.91[/tex]

Elaine gains $3,956.91 from preparing her own tax return.

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