Question

A company deposits $3500 in a bank at the end of every year for 12 years. The company makes no deposits during the subsequent 8 years. If the bank pays 6% interest, how much would be in the account at the end of 20 years?

Answer 1

FV= $94,108.42

Step-by-step explanation:

First, we need to calculate the future value of the 12 annual deposits:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {3,500*[(1.06^12) - 1]} / 0.06

FV= $59,044.79

Now, the future value at the end of the 20 years (8 years more):

FV= PV*(1 + i)^n

FV= 59,044.79*(1.06^8)

FV= $94,108.42