Question

You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payments of $2,250 at an annual interest rate of 8%. How much money will you have available at the end of four years?

Answer 1

Final Value= $10,949.85

Step-by-step explanation:

Giving the following information:

You decided to deposit your money in the bank at the beginning of the year. You are making payments of $2,250 at an annual interest rate of 8%.

n= 4 years

We need to use the following formula:

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

A= annual deposit

Because the money makes interest from the beginning of the year, we have to sum the extra interest being compounded.

FV= {2250*[(1.08^4)-1]}/0.08 + {[2250*(1.08^4)] - 2250}

FV= 10,138.75 + 811.10

FV= 10,949.85