SOLUTION: You deposit $3000 at the beginning of each year into an account earning 6% interest compounded annually. How much will you have in the account in 15 years?

Algebra ->  Finance -> SOLUTION: You deposit $3000 at the beginning of each year into an account earning 6% interest compounded annually. How much will you have in the account in 15 years?      Log On


   

Question 1135580: You deposit $3000 at the beginning of each year into an account earning 6% interest compounded annually. How much will you have in the account in 15 years?
Answer by ikleyn(52800) About Me  (Show Source):
You can put this solution on YOUR website!
.

You deposit $3000 at the beginning of each year into an account earning 6% interest compounded annually.
How much will you have in the account in 15 years?
~~~~~~~~~~~~~~~~~~~~~~~~~~ 


It is a classic Annuity Due saving plan. The general formula is 


    FV = P%2A%281%2Br%29%2A%28%28%281%2Br%29%5En-1%29%2Fr%29,    (1)


where  FV is the future value of the account;  P is your 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 = 3000;  r = 0.06;  n = 15.  So, according to the formula (1), you get at the end of the 15-th year


    FV = 3000%2A%281%2B0.06%29%2A%28%28%281%2B0.06%29%5E15-1%29%2F0.06%29 = $74017.58.    ANSWER

-----------------

On Annuity Due saving plans,  see the lesson
    - Annuity Due saving plans and geometric progressions
in this site.

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

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