Question

Five annual deposits in the amounts of $9,000, $8,000, $7,000, $6,000, and $5,000, in that order, are made into a fund that pays interest at a rate of 10% compounded annually Determine the amount in the fund immediately after the fifth deposit

Answer 1

Future value ($) = 9,000 x F/P(10%, 4) + 8,000 x F/P(10%, 3) + 7,000 x F/P(10%, 2) + 6,000 x F/P(10%, 1) + 5,000

= 9,000 x 1.4641** + 8,000 x 1.331** + 7,000 x 1.21** + 6,000 x 1.1** + 5,000

= 13,176.9 + 9,048 + 8,470 + 6,600 + 5,000

= 42,294.9

**From F/P Factor table

(It is assumed that first deposit is made at end of year 1).