SOLUTION: Ms. Montgomery invested $1,600 at 10% simple interest at the beginning of each year for a period of ten years. Find the total accumulated value of all the investments at the end of

Question 1156690: Ms. Montgomery invested $1,600 at 10% simple interest at the beginning of each year for a period of ten years. Find the total accumulated value of all the investments at the end of the 10-year period.
Answer by ikleyn(52781) (Show Source): You can put this solution on YOUR website!
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It is a classic Annuity Due saving plan. The general formula is 


    FV = ,    (1)


where  FV is the future value of the account;  P is the annual payment (deposit); r is the annual percentage rate presented as a decimal; 
n is the number of deposits (= the number of years, in this case).


Under the given conditions, P = 1600;  r = 0.10;  n = 10.  So, according to the formula (1), he will get at the end of the 10-th year


    FV =  = $28,049.87 dollars.


Note that he deposit only  10*$1600 = $16,000.  The rest is what the account earns/accumulates in 10 years.

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On Ordinary Annuity saving plans and on Annuity Due saving plans, see the lessons
    - Ordinary Annuity saving plans and geometric progressions
    - Solved problems on Ordinary Annuity saving plans
    - Annuity Due saving plans and geometric progressions
in this site.

The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.

When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.

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