Deposits of $1 are made at the beginning of each year for 14 years. The annual effective interest rate is 3.5%. Calculate the accumulated value of the deposits on the date of the last deposit.

Answer 1

To calculate the accumulated value of the deposits, we can use the formula for the future value of an annuity:

FV = P * [(1 + r)^n - 1] / r

Where:
FV = Future Value (accumulated value of the deposits)
P = Annual deposit amount
r = Annual interest rate
n = Number of years

In this case, P = $1, r = 3.5% = 0.035, and n = 14.

FV = $1 * [(1 + 0.035)^14 - 1] / 0.035
= $1 * [1.035^14 - 1] / 0.035
= $1 * [1.557407724 - 1] / 0.035
= $1 * 0.557407724 / 0.035
= $0.557407724 / 0.035
≈ $15.92

Therefore, the accumulated value of the deposits on the date of the last deposit is approximately $15.92.