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27 May, 06:34

Waldo expects to receive the following payments: year 1 = $50,000; year 2 = $28,000; year 3 = $12,000. All of this money will be saved for his retirement. If he can earn an average annual return of 10.5 percent, how much will he have in his account 25 years after making the first deposit?

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  1. 27 May, 09:29
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    the future value is equal to $ 1,033,544.53

    Explanation:

    The first deposit will be made at the end of 1st year. 25 years after the first deposit means subtract the year from 25+1 = 26 years

    years deposit FV factor at the end of 5 year future value

    1.105 * 26

    1 50000 12.13547977 606773.9884

    2 28000 1 0.98233463 307505.3697

    3 12000 9.938764372 119265.1725

    FV 1,033,544.53

    hence, the future value is equal to $ 1,033,544.53
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