Question

You plan to make annual deposits of $1,000 into an account at the beginning of each year for the next 12 years. If you can earn 3.1% interest, what will your final balance be by the end of 12 years

Answer 1

Final balance = $ 14,272.93

Step-by-step explanation:

Annual Deposits(PMT) = $1,000

Number of years(N) = 12

Rate of interest (r) = 3.1% = 0.031

Future Value = ?

Computation:

`Future\ Value = PMT[((1+i)^n-1)/(i) ] \\Future\ Value = 1,000[((1+0.031)^(12)-1)/(0.031) ] \\Future\ Value = 1,000[((1.031)^(12)-1)/(0.031) ] \\Future\ Value = 1,000[(1.44246-1)/(0.031) ] \\Future\ Value = 1,000[(0.44246)/(0.031) ] \\Future\ Value = 1,000[14.2729] \\Future\ Value = 14,272.9252`

Final balance = $ 14,272.93