SOLUTION: Taylor deposits $3,500 at the end of year 1, $4,000 at the end of year 3 and $2,500 at the end of year 5. If interest is 6.2% compounded monthly, determine the value at the end of
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Question 1103899: Taylor deposits $3,500 at the end of year 1, $4,000 at the end of year 3 and $2,500 at the end of year 5. If interest is 6.2% compounded monthly, determine the value at the end of year 7
Found 2 solutions by Boreal, Theo:
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
At the end of year 1, $3500
at the end of year 3, 3500(1+(.062/12))^24=$3960.79
puts in 4000 more so $7960.79.
That is compounded for 24 months to give 7960.79(1+.062/12)^24=$9008.86.
Puts in 2500 more to have $11508.86
That is compounded for 24 months to give 11508.86(1+(.062/12)^24=$13024.05
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rough check--deposited $10000 at 6.2% for 7 years--this is an overestimate: (1+.062/12)^84 is multiplier, which is $15,417. If I use an average of 48 months for the whole amount, it is $12,806.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
3500 invested at the end of year 1.
4000 invested at the end of year 3.
2500 invested at the end of year 5.
what is value at end of year 7.
the general formula is:
f = p * (1 + r/c) ^ (n*c)
f is the future value
p is the present value
r is the interest rate per year.
n is the number of years.
c is the number of compounding periods per year.
your future value will be 7 years from today.
you compounding periods per year is equal to 12.
your yearly interest rate is equal to 6.2% / 100 = .062.
at the end of year 1, you will invest $3500 for 7 - 1 = 6 years.
at the end of year 3, you will invest 4000 for 7 - 3 = 4 years.
at the end of year 5, you will invest 2500 for 7 - 5 = 2 years
your future values will be:
f = 3500 * (1 + .062/12) ^ (6*12) = 5072.36
f = 4000 * (1 + .062/12) ^ (4*12) = 5122.57
f = 2500 * (1 + .062/12) ^ (2*12) = 2829.14
your total future value will be $13,024.07
your monthly cash flow looks like this:
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