Question

You deposit $1,700 at the end of each year into an account paying 11.6 percent interest.

Required:
(a)	How much money will you have in the account in 17 years?

(b)	How much will you have if you make deposits for 34 years?

Answer 1

Solution:
a.	Money in account in 17 years   $	80,030.06
Working Notes:
Notes:	Here, we use concept of future value of annuity , to get the money in account after 17 years of annuity of $1,700 per year , in account which is paying 11.6 % per year.
	Future value of annuity = P x ((1+i)^n - 1)/I
	Where
	P= Annual deposit per year =$1700 per year
	i=annual interest rate = 11.6%
	n= no. Of payments in a year x no. Of years = 1 x 17 =17
Now	We get future value of annuity of 1700, in 17 years
	Future value of annuity = P x ((1+i)^n - 1)/i
	Future value of annuity = $1700 x ((1+ 11.6%)^17 - 1)/11.6%
	Future value of annuity =80,030.05801
	Future value of annuity in 17 years =80,030.06
b.	Money in account in 34 years   $	597,094.22
Working Notes:
Notes:	Here, we use concept of future value of annuity , to get the money in account after 34 years of annuity of $1,700 per year , in account which is paying 11.6 % per year.
	Future value of annuity = P x ((1+i)^n - 1)/i
	Where
	P= Annual deposit per year =$1700 per year
	i=annual interest rate = 11.6%
	n= no. Of payments in a year x no. Of years = 1 x 34 =34
Now	We get future value of annuity of 1700, in 34 years
	Future value of annuity = P x ((1+i)^n - 1)/i
	Future value of annuity = $1700 x ((1+ 11.6%)^34 - 1)/11.6%
	Future value of annuity =597,094.2227035
	Future value of annuity in 34 years =597,094.22
Please feel free to ask if anything about above solution in comment section of the question.