Question

Suppose you open a mutual fund account that is expected to provide a 9% return per year. If you invest $2,416 into this account right away and then invest $1,264 into it two years later, how much money will you have in total in the account 4 years later?

Answer 1

Date	Beginning Balance	Rate of return	Absolute return	Closing Balance
10/01/2020	2,416.00	9%	217.44	2,633.44
10/01/2021	2,633.44	9%	237.01	2,870.45
10/01/2022	4,134.45	9%	372.10	4,506.55
10/01/2023	4,506.55	9%	405.59	4,912.14
10/01/2024	4,912.14	9%	442.09	5,354.23

It is assumed that we start our first investment on 10/01/2020 and 4 years ends on 10/01/2020. So, the end of year 4, I will have USD 5354.23 in my mutual fund account.

Absolute Return = Beginning balance*Rate of return

Closing Balance = Beginning balance + Absolute return

Amount at the beginning of 10/01/2022 is 2870.45+1264 = 4134.45