Question

A person deposits $ 15,000 today in a savings account that pays 3% interest. Three years...

A person deposits $ 15,000 today in a savings account that pays 3% interest. Three years later he deposits $ 14,000. And, then, two years after this last deposit, product of the profit of a developed project, deposits $ 12,500. Four years after depositing the $ 12,500, he removes half of the money accumulated in this account, and transfers this amount to an investment fund that pays a rate of 8%. How much money would you have accumulated six years after the transfer of half the money saved, both product of the savings account, and the investment made? Draw flow diagram.

Homework Answers

Answer #1

15000 deposited at eoy 0

14000 deposited into account at eoy 3

12500 deposited at eoy 5

amount in account at eoy3 = 14000 + 15000*1.03^3 = 30390.905

Amount in account at eoy5 = 12500 + 30390.905*1.03^2 = 44741.711

Amount sits for four more years, value in account at eoy9 = 44741.711*1.03^4 = 50357.90

Half of money is withdrawn = 50357.90 / 2 = 25178.595

Amount on in saving account after six more years = 25178.595 * 1.03^6 = 30064.559

Amount in investment account after six years = 25178.595 * 1.08^6 = 39955.266

Total amount = 30064.559 + 39355.266 = 70019.82 = 70020 (rounding off)

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