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Mr B. deposits at the end of each year 3,000 euros with an annual interest rate...

Mr B. deposits at the end of each year 3,000 euros with an annual interest rate of 2% and this is continued for 6 years. The capital formed at the end of year 6 is deposited in the same bank with a compound interest and the annual interest rate is 1.5%. Find the amount that Mr B. will receive three years after the last deposit?

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Answer #1
Step-1:Future value of annual deposit for 6 years
Future value = Annual deposit * Future value of annuity of 1
= €          3,000 * 6.308121
= €       18,924
Working:
Future value of annuity of 1 = (((1+i)^n)-1)/i Where,
= (((1+0.02)^6)-1)/0.02 i = 2%
= 6.30812096 n = 6
Step-2:Future value of investment 3 years after last deposit
Future value = P*(1+i)^n Where,
= 18924.36*(1+0.015)^3 P = € 18,924.36
= €       19,789 i = 1.50%
n = 3
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