Question

A) Use Excel to calculate how much would accumulate in a savings account at the end of 5 years if the account paid 6% compound interest per year and you deposited $5,000 per year at the end of each year. explain how you calculated your answers.

B) Use Excel to recalculate your answer assuming you deposited the $5,000 at the beginning of each year? explain how you calculated your answers

Answer 1

Solution A) - Deposits at end of each year FV factor Year @ 6% Deposits Future Value 1 1.2625 $ 5,000 $ 6,312.38 2 1.1910 $ 5,000 $ 5,955.08 3 1.1236 $ 5,000 $ 5,618.00 4 1.0600 $ 5,000 $5,300.00 5 1.0000 $ 5,000 $5,000.00 $28,185.46 5 Accumulated Amount in savings account : $28,185.46 Solution B) - Deposits at beginning of each year FV factor Year @ 6% Deposits Future Value 1 1.3382 $ 5,000 $ 6,691.13 2 1.2625 $ 5,000 $ 6,312.38 3 1.1910 $ 5,000 $ 5,955.08 4 1.1236 $ 5,000 $ 5,618.00 5 1.0600 $ 5,000 $5,300.00 $ 29,876.59 Accumulated Amount in savings account: $29,876.59

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