Question

Assume you deposit $2,500 every six months at 10 percent compounded semi-annually. How much will you have at the end of 10 years?

Note: Please use Excel and show the formula to find the answer. I'm guessing it would be using the future value function, but I didn't know how to set it up. Thanks

Answer 1

The FV of the annuity is given by the formula
FVA10 = 2500*(1.05^20-1)/0.05 =	$       82,664.89
Using EXCEL:
Rate = 5%
Nper = 20
PMT = -2500
Type 0
$                                                                       82,664.89