SOLUTION: What will the future value be if you open the account with $1,000 today, and then make
the $100 deposits at the end of each year? The deposit those payments into an account
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the $100 deposits at the end of each year? The deposit those payments into an account
earni
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Question 1181949: What will the future value be if you open the account with $1,000 today, and then make
the $100 deposits at the end of each year? The deposit those payments into an account
earning 8%, for 10 years Answer by ikleyn(52781) (Show Source):
You can put this solution on YOUR website! .
What will the future value be if you open the account with $1,000 today, and then make
the $100 deposits at the end of each year? The deposit those payments into an account
earning 8%, for 10 years
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It works as if you have two separate accounts:
(a) one account is the principal $1000 deposited once for 10 years at 8% compounded annually;
(b) and the other, which is an Ordinary Annuity plan with $100 deposits at the end of each year
at 8% compounded annually.
For the first account, the future value after 10 years is
FV1 = = = 2158.93 dollars.
For the second account, the future value after 10 years is
FV2 = = = 1448.66 dollars.
Now, the future value of the original account in 10 years is the sum of these two amounts
FV = FV1 + FV2 = 2158.93 + 1448.66 = 3607.59 dollars. ANSWER
