Question

Please answer the following question:

You deposite $10,000 in a savings fund today. You continue to deposit $5,000 every year dor the next 16 years. However, on the 17th year, you deposit only $3,000 in the fund. How much will you have after the 17th deposit? annual return the fund pays is 6.5 %

please answer this in terms of using calculater if possible using the functions:

N, IY, PV, FV, PMT

Answer 1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS $174,635.57

There can be multiple ways to solve this one.

As we are depositing $5000 each year and only $3000 is one different amount, we better assume it to be $5000 and decreasing $2000 from the final answer ,as it is a terminal outflow and using annuity function on the rest.

So,

Using,

PV = -10000

I/Y = 6.5

n = 17

PMT = -5000

CPT -> FV

We get FV = $176,635.57

Hence, decreasing $2000 from it, we get our answer, FV = $174,635.57

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Thanks!