Question

Connor has $2500 in his savings account today. He earns interest at 7.8% p.a. compounded half-yearly. He plans to make the following deposits: $2400 in 2 years, and $3700 in 8 years. How much will be in Connor’s bank account in 13 years? (Round your answer to 2 decimal places. Do not put $. Do not use comma separators. E.g. 1234.56)

Answer 1

Future Value = PV(1+r)^n

FV of $2500 Today after 13 Years:

= $ 2500 ( 1 + 0.039)^26

= $ 2500 ( 1.039)^26

= $ 2500 * 2.7040

= $ 6759.96

FV of $2400 deposited after 2Years at the time of 13 Years:

= $ 2400 ( 1 + 0.039)^22

= $ 2400 ( 1.039)^22

= $ 2400 * 2.3203

= $ 5568.69

FV of $3700 deposited after 8 Years at the time of 13 Years:

= $ 3700 ( 1 + 0.039)^10

= $ 3700 ( 1.039)^10

= $ 3700 * 1.4661

= $ 5424.47

FV after 13 Years in the account is = $ 6759.96 + $ 5568.69 + $ 5424.47

= $ 17753.12