Question

Starting at the end of this year, you plan to make annual deposits of $8,000 for the next 10 years followed by deposits of $9,000 for the following 10 years. The deposits earn interest of 7.0%. What will the account balance be by the end of 25 years? Round to the nearest cent.

Answer 1

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 8000*(((1+ 7/100)^10-1)/(7/100))

FV = 110531.58

Future value = present value*(1+ rate)^time

Future value = 110531.38*(1+0.07)^15

Future value = 304959.56

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 9000*(((1+ 7/100)^10-1)/(7/100))

FV = 124348.03

Future value = present value*(1+ rate)^time

Future value = 124348.03*(1+0.07)^5

Future value = 174404.54

Total = 174404.54+304959.56=479364.1