Question

Peggy Poor established a savings account for her son's college

education by making annual deposits of $5,000 at the beginning of each of fifteen years to an investment account expected to earn 12%. At the end of the fifteen year, the account balance was transferred to a lower risk investment paying 8%, and annual deposits of $5,000 were made at the beginning of each year from the sixteenth through the eighteenth year. What was the account balance at the end of the eighteenth year?

$ __________

Answer 1

rate positively ..

	Sthis is two step problem
	step -1 computation of future value at the end of 15th year
	we have to use finanical calculator to solve this
	put in calculator, before that set the calculator at BEGIN mode
	PV		0
	PMT		-5000
	I		12%
	N		15
	compute FV	$208,766.40
	Step 2 computation of future value at the end of 18th year
	PV		-208766.40
	PMT		-5000
	I		8%
	N		3
	compute FV	$280,516.10
	ans =		$280,516.10