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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