Question

You start saving $1,000 at the end of this year and increase your saving by 2% every year for 17 years. Your account earns 15%. How much will you have in your account in 17 years?

Answer 1

Saving during Year 1 = $1,000
Growth Rate = 2%
Interest Rate = 15%
Period = 17 years

Future Value = $1,000*1.15^16 + $1,000*1.02*1.15^15 + … + $1,000*1.02^15*1.15 + $1,000*1.02^16
Future Value = ($1,000*1.15^16) * [1 - (1.02/1.15)^17] / [1 - (1.02/1.15)]
Future Value = $1,000 * [(1.15)^17 - (1.02)^17] / [0.15 - 0.02]
Future Value = $1,000 * 72.00787
Future Value = $72,007.87

So, you will have $72,007.87 in your account after 17 year