Suppose that you earned a bachelor's degree and now you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a master's degree. To achieve this goal, you deposit \( \$ 2000 \) at the end of each year in an annuity that pays \( 4.5 \% \) compounded annually. a. How much will you have saved at the end of five years? b. Find the interest.

To find out how much you’ll have saved at the end of five years with annual deposits, you can use the future value of an annuity formula: \[ FV = P \times \frac{(1 + r)^n - 1}{r} \] where: - \( P \) is the annual payment (\$2000) - \( r \) is the interest rate (4.5% or 0.045) - \( n \) is the number of years (5) Plugging in the values, we get: \[ FV = 2000 \times \frac{(1 + 0.045)^5 - 1}{0.045} \approx 2000 \times \frac{1.246 - 1}{0.045} \approx 2000 \times 5.49 \approx 10980 \] So at the end of five years, you will have approximately \$10,980. To find the interest earned, subtract the total contributions from the final amount. Your total contributions over 5 years are: \[ Total\:Contributions = 2000 \times 5 = 10000 \] The interest earned will thus be: \[ Interest = FV - Total\:Contributions = 10980 - 10000 = 980 \] In summary, you’ll save about \$10,980, and the interest earned will be approximately \$980.