Question

Derek will deposit $2,756.00 per year for 10.00 years into an account that earns 13.00%. Assuming the first deposit is made 6.00 years from today, how much will be in the account 34.00 years from today?

Answer 1

Present Value of Deposits = $ 2,756 * 1/(1.13) ^ 6 +$ 2,756 * 1/(1.13) ^7+$ 2,756 * 1/(1.13) ^8+$ 2,756 * 1/(1.13) ^9+$ 2,756 * 1/(1.13) ^10+..... $ 2,756 * 1/(1.13) ^15

= $ 8,116.83

Future Value = Present Value * ( 1+ Rate of Interest ) ^ time

= $ 8,116.83 * ( 1+13/100) ^ 34

= $ 517,670.633

Hence the correct answer is $ 517,670.63