elaine romberg prepares her own income tax return each year. a tax preparer would charge her $60 for this…

elaine romberg prepares her own income tax return each year. a tax preparer would charge her $60 for this service. over a period of 10 years, how much does elaine gain from preparing her own tax return? assume she can earn 6 percent on her savings. (exhibit 1 - a, exhibit 1 - b, exhibit 1 - c, exhibit 1 - d) note: do not round intermediate calculations. round your final answer to two decimals. future value of total gain

elaine romberg prepares her own income tax return each year. a tax preparer would charge her $60 for this service. over a period of 10 years, how much does elaine gain from preparing her own tax return? assume she can earn 6 percent on her savings. (exhibit 1 - a, exhibit 1 - b, exhibit 1 - c, exhibit 1 - d) note: do not round intermediate calculations. round your final answer to two decimals. future value of total gain

Answer

Explanation:

Step1: Identify the annual savings

Elaine saves $60 per year by preparing her own tax - return. $Annual\ savings = 60$

Step2: Use the future - value of an ordinary annuity formula

The formula for the future value of an ordinary annuity is $FVA = A\times\frac{(1 + r)^{n}-1}{r}$, where $A$ is the annual payment, $r$ is the interest rate per period, and $n$ is the number of periods. Here, $A = 60$, $r=0.06$, and $n = 10$. $FVA=60\times\frac{(1 + 0.06)^{10}-1}{0.06}$

Step3: Calculate $(1 + 0.06)^{10}$

$(1 + 0.06)^{10}=1.06^{10}\approx1.7908477$

Step4: Calculate $(1 + 0.06)^{10}-1$

$1.7908477-1 = 0.7908477$

Step5: Calculate $\frac{(1 + 0.06)^{10}-1}{0.06}$

$\frac{0.7908477}{0.06}\approx13.180795$

Step6: Calculate the future value of the annuity

$FVA=60\times13.180795 = 790.8477\approx790.85$

Answer:

$790.85$