Question

Calculate how much you would have in 10 years if you saved $2,000 a year at an annual rate of 10 percent per year?
(assume annual compounding)
Below is what I have calculated:

			2K + Interest	Years	10% Interest	EOY Total
Saved per Year	2000		$     2,200.00	Year 1	200.00	$    2,200.00
			$     4,200.00	Year 2	420.00	$    4,620.00
			$     6,620.00	Year 3	662.00	$    7,282.00
			$     9,282.00	Year 4	928.20	$ 10,210.20
			$   12,210.20	Year 5	1,221.02	$ 13,431.22
			$   15,431.22	Year 6	1,543.12	$ 16,974.34
			$   18,974.34	Year 7	1,897.43	$ 20,871.78
			$   22,871.78	Year 8	2,287.18	$ 25,158.95
			$   27,158.95	Year 9	2,715.90	$ 29,874.85
			$   31,874.85	Year 10	3,187.48	$ 35,062.33

Answer 1

Future Value = Present Value * ( 1+ Rate of Interest ) Time

= $ 12,289.13421 * ( 1+ 10%) ^ 10

= $ 31,874.8492

Hence the correct answer is $31,874.85

Note:

1. Present Value :

Year	Cash Flow	Discounting Factor (10%)	Present Value (Cash Flow * Discounting Factor)
1	2000	0.909090909	1818.181818
2	2000	0.826446281	1652.892562
3	2000	0.751314801	1502.629602
4	2000	0.683013455	1366.026911
5	2000	0.620921323	1241.842646
6	2000	0.56447393	1128.94786
7	2000	0.513158118	1026.316236
8	2000	0.46650738	933.0147604
9	2000	0.424097618	848.1952367
10	2000	0.385543289	771.0865789
			12289.13421