SOLUTION: Cannon wants to put as much as he can into an account as soon as he starts working He deposits 25000 at the end of each year for 5 years in an account paying 6% compounded annuall

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Question 1208885: Cannon wants to put as much as he can into an account as soon as he starts working
He deposits 25000 at the end of each year for 5 years in an account paying 6% compounded annually. How much will he have at the end of the 6th year.
Found 2 solutions by KMST, ikleyn:
Answer by KMST(5328)   (Show Source): You can put this solution on YOUR website!
At the end of each year, Cannon gets 6% added to the balance.
If the balance at the beginning of a year is b, the interest earned is .
That makes the end of the year balance .
As that multiplying times happens at the end of each year,
at the end of the 6th year the initial 25000 deposit has grown to
(rounded to the nearest cent).
The second deposit would have grown to
The third deposit would have grown to
The fourth deposit would have grown to
The fifth deposit would have grown to
The total at the end of the sixth year will be
Answer by ikleyn(52776)   (Show Source): You can put this solution on YOUR website!
.

Notice that during first 5 years, this saving plan works as a  standard Ordinary Annuity,
and you can calculate its future value after 5 years using standard formula


    FV(in 5 years) =  = 140927.324.


In the 6th year, there is no deposit/withdrawal, so this amount grows in the 6th year
as an one-time deposit with the growth coefficient 1.06.


It gives the final amount after 6 years as

    140927.324*1.06 = 149382.96.


So, the ANSWER is the same as in the post by @KMST.


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