Question

What is the future value at the end of year 28 of depositing $5,000 today, $3,500 at the end of years 1, 2 and 3, $5,000 at the end of years 4, 5, 6 and 7 and $4,250 at the end of years 8, 9, 10, 11 and 12 into an account that pays 9.5% p.a.? (No deposits will be made into the account after year 12).

Answer 1

Computation of future value of deposits Year Cash flows Term to future vahue FVIF @ 9.5% Future value of cash flows $63,469.54 S5,000 28 0 12.69390772 1 S3,500 27 11.59260979 $40,574.13 2 $3,500 26 10.58685826 $37,054.00 $33,839.27 $44,147.78 3 $3,500 25 9.668363706 $5,000 4 24 8.829555896 5 $5,000 23 8.063521366 $40,317.61 6 $5,000 22 7.363946453 $36,819.73 $5,000 $33,625.33 $26,101.85 $23,837.31 21 6.725065254 8 $4,250 20 6.141612104 $4,250 $4,250 5.608778177 19 10 18 5.122171851 $21,769.23 4.677782513 11 $4,250 17 $19,880.58 12 $4,250 16 4.2719475 $18,155.78 S439,592.14 Ans Future value of deposits at the end of Year 28 S439,592.14 Note : FVIF(I, n) = (1 +1Y'n .