Question_3-3_Solution

# Question_3-3_Solution - Question 3-3 Ben deposits \$5,000...

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Unformatted text preview: Question 3-3 Ben deposits \$5,000 now into an account that earns 7.5 percent interest compounded annually. He then deposits \$1,000 per Solution year at the end of the first and second years and no more. How Rate 7.50% much will the account contain 10 years after the initial Tabulation deposits? Year 0 1 2 3 4 5 6 7 8 9 10 Deposit \$5,000 \$1,000 \$1,000 \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 Interest 0 \$375.0 \$478.1 \$589.0 \$633.2 \$680.6 \$731.7 \$786.6 \$845.6 \$909.0 \$977.2 Balance \$5,000 \$6,375 \$7,853 \$8,442 \$9,075 \$9,756 \$10,488 \$11,274 \$12,120 \$13,029 \$14,006 OR Amount (\$5,000) (\$1,000) Years 0 1 (\$1,000) OR Amount (\$5,000) (\$1,000) 2 FW FV \$10,305 \$1,917 \$1,783 \$14,006 =FV(7.5%,10-I8,,H8) =FV(7.5%,10-I9,,H9) =FV(7.5%,10-I10,,H10) =SUM(J8:J10) Years 0 1 (\$1,000) 2 PW FW PV \$5,000 \$930 \$865 \$6,796 =SUM(J8:J10) \$14,006 \$1,796 =PV(C5,2,-1000,0) OR Present value of years 1-2 Year 0 sum to get PW FW \$5,000 \$6,796 \$14,006 =FV(C5,10,0,-J22) ...
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