Suppose you deposit $5,000 at the end of year 1, nothing at the end of year...
Suppose you deposit $5,000 at the end of year 1, nothing at the end of year 2, $2,500 at the end of year 3, and $1,300 at the end of year 4. Assuming that these amounts will be compounded at an annual rate of 12 percent, how much will you have on deposit at the end of five years?
Homework Answers
Amount deposited at the end of Year 1 = $5,000
Amount deposited at the end of Year 2 = $0
Amount deposited at the end of Year 3 = $2,500
Amount deposited at the end of Year 4 = $1,300
Interest rate = 12%
Value of deposit at the end of Year 5 = $5,000 * 1.12^4 + $0 *
1.12^3 + $2,500 * 1.12^2 + $1,300 * 1.12
Value of deposit at the end of Year 5 = $5,000 * 1.57352 + $0 +
$2,500 * 1.25440 + $1,300 * 1.12
Value of deposit at the end of Year 5 = $12,459.60 or $12,460
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