SOLUTION: What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year? The deposit those payments into an account earni

Question 1181949: What will the future value be if you open the account with $1,000 today, and then make
the $100 deposits at the end of each year? The deposit those payments into an account
earning 8%, for 10 years
Answer by ikleyn(52781) (Show Source): You can put this solution on YOUR website!
.
What will the future value be if you open the account with $1,000 today, and then make
the $100 deposits at the end of each year? The deposit those payments into an account
earning 8%, for 10 years
~~~~~~~~~~~~~~

It works as if you have two separate accounts:


    (a) one account is the principal $1000 deposited once for 10 years at 8% compounded annually;


    (b) and the other, which is an Ordinary Annuity plan with $100 deposits at the end of each year 
        at 8% compounded annually.



For the first account, the future value after 10 years is

        FV1 =  =  = 2158.93  dollars.



For the second account, the future value after 10 years is

        FV2 =  =  = 1448.66  dollars.



Now, the future value of the original account in 10 years is the sum of these two amounts 


        FV = FV1 + FV2 = 2158.93 + 1448.66 = 3607.59 dollars.    ANSWER

Solved, answered and carefully explained.

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