Question

You deposit 10,500 into a brokerage account. You will invest another $7,500 at the end of...

You deposit 10,500 into a brokerage account. You will invest another $7,500 at the end of each of the next 7 years. It earns 11.25% a year on the investments. How much will be in the account 7 years from now? How much will be in the account at the end of 7 years?

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Answer #1

Given,

Deposit = $10500

Annual deposit = $7500

Number of years (n) = 7 years

Rate of return (r) = 11.25% or 0.1125

Solution :-

Future value = [Deposit x (1 + r)n] + [Annual deposit/r x {(1 + r)n - 1}]

= [$10500 x (1 + 0.1125)7] + [$7500/0.1125 x {(1 + 0.1125)7 - 1}]

= [$10500 x (1.1125)7] + [$7500/0.1125 x {(1.1125)7 - 1}]

= [$10500 x 2.10911440347] + [$7500/0.1125 x {2.10911440347 - 1}]

= $22145.7012364 + [$7500/0.1125 x 1.10911440347]

= $22145.7012364 + $73940.9602312

= $96086.66

So, $96086.66 will be in the account 7 years from now.

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