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Question 14 After graduation, you plan to work for Rocket Corporation for 13 years and then...

Question 14

  1. After graduation, you plan to work for Rocket Corporation for 13 years and then start your own business. You expect to save and deposit $7,000 a year for the first 6 years (t = 1 through t = 6) and $12,500 annually for the following 7 years (t = 7 through t = 13). The first deposit will be made a year from today. In addition, your mother just gave you a $20,00 graduation gift as an incentive to work hard which you will deposit immediately (t = 0). If the account earns 6.5% compounded annually, how much will you have when you start your business 13 years from now?

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Answer #1
Year Opening balance Investment at beginning of year Balance Interest Closing Balance
A B C=A+B D=C*4% E=C+D
1 0 2000 2000 80 2080
2 2080 7000 9080 363.2 9443.2
3 9443.2 7000 16443.2 657.728 17100.93
4 17100.928 7000 24100.93 964.0371 25064.97
5 25064.965 7000 32064.97 1282.599 33347.56
6 33347.564 7000 40347.56 1613.903 41961.47
7 41961.466 7000 48961.47 1958.459 50919.92
8 50919.925 12500 63419.92 2536.797 65956.72
9 65956.722 12500 78456.72 3138.269 81594.99
10 81594.991 12500 94094.99 3763.8 97858.79
11 97858.79 12500 110358.8 4414.352 114773.1
12 114773.14 12500 127273.1 5090.926 132364.1
13 132364.07 12500 144864.1 5794.563 150658.6

Amount available to start the business is 150658.6

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