A company deposits $2,378 in a bank at the end of every year for 10 years. The company makes no deposits during the subsequent 5 years. If the bank pays 10% interest, how much would be in the account at the end of 15 years?

Question

Erica Mora

Business

18 August, 13:16

A company deposits $2,378 in a bank at the end of every year for 10 years. The company makes no deposits during the subsequent 5 years. If the bank pays 10% interest, how much would be in the account at the end of 15 years?

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Answers (1)

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Alfredo Maynard · Answer 1

Final Value = $61,037.04

Explanation:

Giving the following information:

Investment = $2,378 in a bank at the end of every year for 10 years.

The company makes no deposits during the subsequent 5 years.

Interest rate = 10%

First, we need to calculate the first 10 years.

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

FV = {2,378*[ (1.1^10) - 1]} / 0.1

FV = $37,899.20

Now, the 5 years:

FV = PV * (1+i) ^n

FV = 37,899.2 * (1.1^5)

FV = $61,037.04