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23 January, 12:31

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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  1. 23 January, 13:02
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    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
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