Sue plans to save $4,500, $0, and $5,500 at the end of Years 1 to 3, respectively. What will her investment account be worth at the end of the Year 3 if she earns an annual rate of 4.15 percent annually?

Scenario 1: If it is $0 in year 2:

Answer = $10,381.25

Scenario 2: If it is $500 in year 2

Answer = $10,881.25

Explanation:

In my opinion, you have skipped the amount for year 2, in my opinion it is $500. I am therefore, posting the answer relevant to both scenarios:

Scenario 1: If it is $0 in year 2

Scenario 2: If it is $500 in year 2

Scenario 1: If it is $0 in year 2:

Investment at the end of year 3 = $4,500 * (1+0.0415) ^2 + $5,500 * (1+0.0415) ^0

Investment at the end of year 3 = $10,381.25

Scenario 2: If it is $500 in year 2:

Investment at the end of year 3 = $4,500 * (1+0.0415) ^2 + $500 * (1+0.0415) ^1 + $5,500 * (1+0.0415) ^0

Investment at the end of year 3 = $10,881.25

Key notes:

Investment made at end of year 1 will remain invested for 2 years [3-1]. Investment made at end of year 2 will remain invested for 1 years [3-2] Investment made at end of year 3 will remain invested for 0 years [3-3]