SOLUTION: At the age of 30 you decide to start saving money. At first you can only afford to deposit $200 per month. However, at the age of 38 you are able to deposit $300 per month. Then at

Question 833745: At the age of 30 you decide to start saving money. At first you can only afford to deposit $200 per month. However, at the age of 38 you are able to deposit $300 per month. Then at the age of 45 you raise your monthly deposit again to $500 per month. Finally at the age of 50 you get promoted to president of the company and are able to deposit $2000 per month into the account. Assuming your account is earning (prime interest rate + 4%) in interest, compounded monthly, how much do you have in your account at the age of 70? Hint: Treat each time that you change the deposit amount as a seperate annuity, and compute the future value (FV) on each annuity seperately. Assume that each annuity earns compound interest during the time it is not receiving deposits. Please show work.

Answer by njohn01(1) (Show Source): You can put this solution on YOUR website!
65
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