Question

How much money would be accumulated 18 years from now from deposits of $15,000 per year for five consecutive years, starting 3 years from now, if the interest rate is 8% per year?

Answer 1

Solution:

Annual deposit from beginning of 4th year to beginning of 8th year = $15,000

First deposit will be for 15 year, 2nd deposit will be for 14 years and simliarly last deposit will be for 11 years

Interest rate = 8%

Now accumulated amount after 18 years

= [$15,000 * (1+0.08)^15] + [$15,000* (1.08)^14] +  [$15,000* (1.08)^13] +  [$15,000* (1.08)^12] +  [$15,000* (1.08)^11]

= ($15,000*3.172169) + ($15,000*2.937194) + ($15,000*2.719624) + (15,000*2.51817) + ($15,000*2.331639)

= $205,181.93

Thefore money accumulated 18 years from now = $205,171.93