Question
In: Finance
You need to accumulate $10,000. To do so, you plan to make deposits of $1,250 peryear—...
You need to accumulate $10,000. To do so, you plan to make deposits of $1,250 peryear— with the first payment being made a year from today —into a bank account that pays 12% annual interest .Your last deposit will be less than $1,250 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal ,and how large will the last deposit be?
Solutions
Expert Solution
| Time | Opening Balance | Interest | Total Balance | Deposits | Closing Balance |
| 1.00 | - | - | - | 1,250.00 | 1,250.00 |
| 2.00 | 1,250.00 | 150.00 | 1,400.00 | 1,250.00 | 2,650.00 |
| 3.00 | 2,650.00 | 318.00 | 2,968.00 | 1,250.00 | 4,218.00 |
| 4.00 | 4,218.00 | 506.16 | 4,724.16 | 1,250.00 | 5,974.16 |
| 5.00 | 5,974.16 | 716.90 | 6,691.06 | 1,250.00 | 7,941.06 |
| 6.00 | 7,941.06 | 952.93 | 8,893.99 | 1,106.01 | 10,000.00 |
| It will take 6years to reach goalof 10,000 | |||||
| Last deposit would be 1,106.01 |
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