Scribd Logo
Upload

Welcome to Scribd!

  • 33 views

    Answered - Suppose That A Person Deposits 500 in - Bartleby

    Uploaded by

    Piere Carlo Dimalig
    The document describes a savings account scenario where a person deposits $500 each year for 12 years. It asks the reader to calculate the total accumulated amount at the end of the 12 years with an annual interest rate of 8% and 6.25%, compounded annually. The expert answer provides the formulas to calculate future value of a series of cash flows, applies the formulas to this scenario and determines that with an 8% interest rate the accumulated amount would be $1259.10, and with a 6.25% rate it would be $1034.95.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Answered - Suppose That A Person Deposits 500 in - Bartleby

    Uploaded by

    Piere Carlo Dimalig
    33 views1 page
    The document describes a savings account scenario where a person deposits $500 each year for 12 years. It asks the reader to calculate the total accumulated amount at the end of the 12 years with an annual interest rate of 8% and 6.25%, compounded annually. The expert answer provides the formulas to calculate future value of a series of cash flows, applies the formulas to this scenario and determines that with an 8% interest rate the accumulated amount would be $1259.10, and with a 6.25% rate it would be $1034.95.

    Original Description:

    ezdfjkwriofjr

    Original Title

    Answered_-Suppose-that-a-person-deposits-500-in-_-bartleby

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document describes a savings account scenario where a person deposits $500 each year for 12 years. It asks the reader to calculate the total accumulated amount at the end of the 12 years with an annual interest rate of 8% and 6.25%, compounded annually. The expert answer provides the formulas to calculate future value of a series of cash flows, applies the formulas to this scenario and determines that with an 8% interest rate the accumulated amount would be $1259.10, and with a 6.25% rate it would be $1034.95.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    33 views1 page

    Answered - Suppose That A Person Deposits 500 in - Bartleby

    Uploaded by

    Piere Carlo Dimalig
    The document describes a savings account scenario where a person deposits $500 each year for 12 years. It asks the reader to calculate the total accumulated amount at the end of the 12 years with an annual interest rate of 8% and 6.25%, compounded annually. The expert answer provides the formulas to calculate future value of a series of cash flows, applies the formulas to this scenario and determines that with an 8% interest rate the accumulated amount would be $1259.10, and with a 6.25% rate it would be $1034.95.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 1

    notifications_none PS

    menu

    SEARCH ASK CHAT MATH SOLVER

    Business » Finance » Q&A Library » Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the ban…

    Question

    Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the bank pays 8% per year,
    compounded annually, how much money will accumulate by the end of the 12-year period?

    Repeat Problem for an interest rate of 6.25% per year, compounded annually?

    check_circle Expert Answer thumb_up thumb_down

    Step 1

    We need to calculate future value present cash flows

    FV = PV * (1 + r)n
    Where,

    FV = Future Value

    PV = Present Value = $500

    r = rate of interest = 8% or 0.08

    n = number of years = 12 years

    FV = 500 * (1 + 0.08)12
    FV = 500 * (1.08)12
    FV = 500 x 2.5182
    FV = $1259.1

    Step 2

    If interest rate of 6.25% per year, compounded annually, the future value will be

    PV = $500

    r = 6.25% or 0.0625

    n = 12 years

    FV = 500 * (1 + 0.0625)12
    FV = 500 * (1.0625)12
    FV = 500 x 2.0699
    FV = 1034.95

    Explore similar questions

    Was this solution helpful? thumb_up thumb_down

    You might also like