Question

A person invests$1000 per year in a fund, for 10 years, and then stops makingpayments. If money is worth 8% per year, what is the value in the fund at the end of 20years

Answer 1

Value of investment at the end of 20 years is $ 31,275.40

Step-1:Calculation of future value of investments in 10 years
Future Value		=	Annual investments	*	Future value of annuity of 1
		=	$         1,000	*	14.48656
		=	$ 14,486.56
Working:
Future value of annuity of 1		=	(((1+i)^n)-1)/i			Where,
		=	(((1+0.08)^10)-1)/0.08			i	8%
		=	14.4865625			n	10
Step-2:Calculation of investments in 20 years
Future value		=	Investment value in 10 years	*	Future value of 1
		=	$ 14,486.56	*	2.158925
		=	$ 31,275.40
Working:
Future value of 1		=	(1+i)^n		Where,
		=	(1+0.08)^10		i	8%
		=	2.158925		n	10