Question 1124984: you plans to deposit $400 at the end of each year for 2 years, $200 at the end of next year, $300 at the end of next 3 years, and $100 at the end of each year for last 2 years. How much will you have over tge entire period if your savings account awards 4% per year
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! your deposits are:
400 at the end of years 1,2.
200 at the end of year 3.
300 at the end of years 4,5,6.
100 at the end of years 7,8
the interest rate is 4% per year.
how much will you have the end of the investment period.
you haven't stated whether it's compound interest or simple interest, nor how often the interest is compounded if it is compound interest.
i'm going to assume that it is compound interest and that the compounding periods are annual.
there are several ways of solving this by use of formulas, but the most straight forward way is to simply find the future value of each of the cash flows for the indicated number of years.
your investments are:
400 at the end of years 1,2.
200 at the end of year 3.
300 at the end of years 4,5,6.
100 at the end of years 7,8
400 at the end of year 1 * 1.04 ^ 7 = 526.3727117.
400 at the end of year 2 * 1.04 ^ 6 = 506.1276074
200 at the end of year 3 * 1.04 ^ 5 = 243.3305805
300 at the end of year 4 * 1.04 ^ 4 = 350.957568
300 at the end of year 5 * 1.04 ^ 3 = 337.4592
300 at the end of year 6 * 1.04 ^ 2 = 324.48
100 at the end of year 7 * 1.04 ^ 1 = 104
100 at the end of year 8 * 1.04 ^ 0 = 100
the future value of the investment is the sum of all the future values for each of the years = $2,492.727668 which can be rounded to $2,492.,73.
this future value was confirmed by analyzing in two other different ways as shown in the following spreadsheet.
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