Step 1: Calculate the tax savings

Since you are in the 24% tax bracket, you will save 24% of your charitable donation in taxes.

$\text{Tax savings} = 4,800 \times 0.24 = 1,152$

So, the tax savings will be $1,152.

Step 2: Calculate the future value of the tax savings

The tax savings of $1,152 will be deposited into a savings account with an interest rate of 8% for 5 years. We will use the Future Value formula for compound interest:

$FV = PV \times (1 + r)^n$

Where:

• $FV$ is the future value,
• $PV = 1,152$ is the present value (tax savings),
• $r = 0.08$ is the annual interest rate,
• $n = 5$ is the number of years.

Let's calculate this step by step:

$FV = 1,152 \times (1 + 0.08)^5$

$FV = 1,152 \times (1.469)$

$FV \approx 1,692.29$

Final Answer:

The future value of the account will be $1,692.29 after 5 years.

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Would you like further details or have any questions?

Here are 5 related questions you might find interesting:

1. How would the future value change if the interest rate were 10% instead of 8%?
2. What if you deposited the tax savings for 10 years instead of 5?
3. How is compound interest different from simple interest in this context?
4. How does the tax bracket affect the tax savings in this scenario?
5. What are the implications of making larger charitable donations in terms of tax savings?

Tip: When saving money, higher interest rates and longer durations result in significantly larger future values due to compound interest!