Question

You deposit $400 each year in an account for 15 years and then $600 each year in an account for the 15 years after that. If you are

earning 8% annual compounding interest in the account how much do you have in 30 years?

A.

$42,131

B.

$ 38,135

C.

$ 48,087

D.

$ 37,298

E.

$ 50,744

Answer 1

Answer:

$ 50,744

Explanation:

First 15 years:,

Annual deposit = $400

Years = 15

Interest rate = 8%

Amount at the end of year 15 = FV (rate, nper, pmt, pv, type) = FV (8%, 15, -400, 0, 0) = $10860.8456

Now next 15 years:

Beginning Balance from first 15 years = $10860.8456

Annual deposit = $400

Amount at the end of year 30 = FV (8%, 15, -600, -10860.8456, 0) = $50,744

As such option E is correct and other options A, B, C and D are incorrect.