In: Finance
If a sum of $9257 is deposited now, $1374 two years from now, and $1375 per year in years 6 through 10, the amount in year 10 at an interest rate of 10% per year will be closest to:
a. $35350
b. $35346
c. $100368
d. None of the answers
The right option is (a).
Explanation:
Amount deposited now = $9257
Amount deposited two years from now = $1374
Annual deposit from years 6 through 10 = $1375
Interest rate = 10% per year
Time period = 10 years
Calculate the amount in Year 10 -
Amount = Amount deposited now(F/P, i, n) + Amount deposited two years from now(F/P, i, n) + Annual deposit from year 6 through 10(F/A, i, n)
Amount = $9257(F/P, 10%, 10) + $1374(F/P, 10%, 8) + $1375(F/A, 10%, 5)
Amount = [$9257 * 2.5937] + [$1374 * 2.1436] + [$1375 * 6.1051]
Amount = $24009.88 + 2945.31 + 8394.51
Amount = $35349.7
Thus,
The amount in year 10 will be closest to $35350.
Hence, the correct answer is the option (a) [$35350].
Hence, the correct answer is the option (a) [$35350].