You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payments of $2,250 at an annual interest rate of 8%. How much money will you have available at the end of four years?

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2 November, 11:02

You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payments of $2,250 at an annual interest rate of 8%. How much money will you have available at the end of four years?

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Answers (1)

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Sandra Prince · Answer 1

Final Value = $10,949.85

Explanation:

Giving the following information:

You decided to deposit your money in the bank at the beginning of the year. You are making payments of $2,250 at an annual interest rate of 8%.

n = 4 years

We need to use the following formula:

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

A = annual deposit

Because the money makes interest from the beginning of the year, we have to sum the extra interest being compounded.

FV = {2250*[ (1.08^4) - 1]}/0.08 + {[2250 * (1.08^4) ] - 2250}

FV = 10,138.75 + 811.10

FV = 10,949.85