Question
Finally, Kevin has a client who would like to invest into an account that earns 3.2% interest, which is compounded annually. The client opens the account with an initial deposit of $4,000, and deposits an additional $4,000 into the account each year thereafter.
How much money is in the account after the tenth deposit, assuming no withdrawals or other deposits were made?
How much money is in the account after the tenth deposit, assuming no withdrawals or other deposits were made?
Answers
sinking fund
S = N [ (1+r)^n - 1 ] /r
where r = .032
n = 10 years
N = 4,000
S = 4,000 [ (1.032)^10 -1 ]/.032
= 4000 [ 1.37 -1 ]/.032
= 4000 [ 11.57]
= 46280 so we got 6280 in interest
S = N [ (1+r)^n - 1 ] /r
where r = .032
n = 10 years
N = 4,000
S = 4,000 [ (1.032)^10 -1 ]/.032
= 4000 [ 1.37 -1 ]/.032
= 4000 [ 11.57]
= 46280 so we got 6280 in interest