In one year your wealthy younger sister will begin depositing $5,000 each year into a savings account for your retirement. The account will compound interest at 5 percent annually and you can't withdraw any money from the account until you retire in 40 years. Which of the following statements is correct?

• The future value of the account is equal to $500 (1 + 0.05)⁴⁰.

• The interest you earn 6 years from now will equal the interest you earn 10 years from now.

  Incorrect

• The present value of this investment is equal to $500.

• The account's value at retirement is given by $5,000(1.05401)0.05$5,000(1.0540-1)0.05

• The total amount of interest you will earn will equal $500 .05 40.