Question

Derek will deposit $6,745.00 per year for 11.00 years into an account that earns 10.00%, The first deposit is made next year. He has $16,340.00 in his account today. How much will be in the account 40.00 years from today?

Answer 1

Calculation of value of money in the account at the end of 11 years:

Rate = 10%
Nper = 11
PMT = 6745
PV = 16340

Future value can be calculated by using the following excel formula:
=FV(rate,nper,pmt,pv)
=FV(10%,11,-6745,-16340)
= $171,612.65

Calculation of value of money 40 years from today:

Rate = 10%
Nper = 40 - 11 = 29
PV = $171,612.65
PMT = 0

Future value can be calculated by using the following excel formula:
=FV(rate,nper,pmt,pv)
=FV(10%,29,0,-171612.65)
= $2,722,307.40

Value of money in the account 40 years from today = $2,722,307.40