Question

After graduation, you plan to work for Dynamo Corporation for 12 years and then start your own business. You expect to save and deposit $7,500 a year for the first 6 years (t = 1 through t = 6) and $15,000 annually for the following 6 years (t = 7 through t = 12). The first deposit will be made a year from today. In addition, your grandfather just gave you a $37,500 graduation gift which you will deposit immediately (t = 0). If the account earns 9% compounded annually, how much will you have when you start your business 12 years from now?

$309,826

$312,955

$359,899

$334,862

$372,417

Answer 1

year	Beginning Balance	Cash Flow	Interest	Ending Balance
a	b	c	d=b*9%	e=b+c+d
1	$             37,500	$           7,500	$           3,375	$             48,375
2	$             48,375	$           7,500	$           4,354	$             60,229
3	$             60,229	$           7,500	$           5,421	$             73,149
4	$             73,149	$           7,500	$           6,583	$             87,233
5	$             87,233	$           7,500	$           7,851	$         1,02,584
6	$         1,02,584	$           7,500	$           9,233	$         1,19,316
7	$         1,19,316	$         15,000	$         10,738	$         1,45,055
8	$         1,45,055	$         15,000	$         13,055	$         1,73,110
9	$         1,73,110	$         15,000	$         15,580	$         2,03,690
10	$         2,03,690	$         15,000	$         18,332	$         2,37,022
11	$         2,37,022	$         15,000	$         21,332	$         2,73,354
12	$         2,73,354	$         15,000	$         24,602	$         3,12,955
	Correct Answer =$312,955