Question
In: Finance
Starting at the end of this year you plan to make annual deposit the $5000 for the next 10 years followed by deposits of $13,000 for the following 10 years the deposits are in interest of 4.4%
Starting at the end of this year you plan to make annual deposit the $5000 for the next 10 years followed by deposits of $13,000 for the following 10 years the deposits are in interest of 4.4%, what will the account balance be by the end of 34 years round to the nearest cent?
Solutions
Expert Solution
The future value of annuity of the first 10 deposits can be calculated as:
FV of first 10 deposits till Year 10 = 5000 * (1 + 0.044)^10 - 1))/0.044
= 5000 * 12.2312
= 61156
The future value of the above for the remaining 24 years is:
61156 * (1 + 4.4%)^24
= 171890.17
The future value of annuity of the deposis from Year 11 to Year 20:
= 10000 * (1 + 0.044)^10 - 1))/0.044
= 10000 * 12.2312
= 122312
Future value of above for the remaining 14 years
= 122312 * (1 + 4.4%)^14
= 223499.24
Account value at end of 34 years = 171890.17 + 223499.24 = 395389.41
jeff jeffy answered 2 years agoRelated Solutions
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