Question

Two years ago, you opened an investment account and deposited $5,000. One year ago, you added another $2,000 to the account. Today, you are making a final deposit of $7,500. How much will you have in this account three years from today if you earn a 14 percent rate of return?

Answer 1

Amount that will be there in the investment account three years from today at a 14% rate of return will be as follows:

For the first year on 5000$

= 5000 + 5000*14% = 5000 + 700 = 5700

Then in second year an addition of 2000$ to the acxount is made. Hence account balance on the first day of second year will be as 5000 + 700 + 2000 = 7700$

Interest for the second year = 7700 * 14% = 1078

Hence acxount balance at the end of second year = 7700 + 1078 = 8778

Today addition made to account = 7500$

Hence acxount balance at today = 16278$

Account balance from 3 years from today will be as 16278(1+14%)(1+14%)(1+14%) = 24116.58 $