Question

Derek will deposit $2,239.00 per year for 25.00 years into an account that earns 9.00%, The first deposit is made next year. How much will be in the account 36.00 years from today?

Answer format: Currency: Round to: 2 decimal places.

Answer 1

This question has 2 parts:

1. Find FV at the end of 25 years
2. Find FV at the end of 36 years

Part 1:

We are given the following information:

Annual payment	PMT	$            2,239.00
rate of interest	r	9.00%
number of years	n	25
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So at the end of 25 years the FV is $189645.31

Part 2:

We are given the following information

Value of account at time 25	FV25	$        189,645.31
rate of interest	r	9.00%
number of years	n	36-25 = 11
Annual Compounding	frequency	1
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV 36 years from now is $489365.76