Question 1193487: $4,250 was deposited at the end of every year for 6 years into a fund earning 2.9% compounded annually. After this period, the accumulated money was left in the account for another 8 years at the same interest rate.
a) Calculate the accumulated amount at the end of the 14-year term. $
b) Calculate the total amount of interest earned during the 14-year period. $
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website!
the future value of the payments for 6 years is 27,421,81.
that future value of the payments is then invested for an additional 8 years with no additional payments and grows to 34,468.24.
that's the accumulated amount at the end of 14 years.
the payments for 6 years totaled 4250 * 6 = 25,500
the future value of the payments is 27,421.81.
the interest earned was 27421.81 minus 25,500 = 1921.81
that 27421.81 was then invested for 8 years and became 34,468.24 at the end of those 8 years.
total interest for that growth only period was 34,468.24 minus 27421.81 = 7046.43.
total interest earned was 7046.43 + 1921.81 = 8968.24.
that's what i get.
hopefully it's right.
let me know how you did and if you have any questions.
theo
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