Question

If $4,000 is invested now, $4,800 two years from now, and $5,200 fouryears from now at an interest rate of 8% compounded annually, what will be the total amount in 10 years? The total amount in 10 years will bes[

NEED STEP BY STEP SOLUTION WITH DATA GIVEN , USED FORMULA , CALCULATION****DON'T USE TABLE FORMAT***** the correct answer with a good solution will be provided with 100% rating THUMB UP and good comments and vice-versa if incorrect

Answer 1

Given information,

A Person planned to invest for 10 years

First year = amount =$4,000

Second year = amount =$4,800

Fourth-year = amount= $5,200

The annual rate of return is = 8%

Here we have to find the future equivalent worth and to find it we can use the following formula

F = P(1 + f)^N1 + P(1 + f)^N2 + P(1 + f)^N3 + ......................(1)

Where,

F = Future equivalent worth

P = Present worth of investment

N = Number of years

f = Rate of interest

Substituting the respective value in the formula(1)

P = 4,000(1.08)¹⁰ + 4,800(1.08)⁸ + 5,200(1.08)⁶

P = 8635.69 + 8,884.46 + 8,251.74

P= $25,771.89

Hence, The total amount in 10 years will be $25,771.89