Question

Your uncle deposited $5,000 into an account for you when you were born, $5,000 more when you turned six, and $5,000 more when you turned twelve. How much will be in the account on your 21^st birthday if interest rates are 6%?

Answer 1

Ans $ 37428.00

FV =	Future Value
PV =	Present Value
r =	rate of interest
n=	no of period
a) Value of amount Deposited at birth the end of 21 years
FV =	PV (1 + r )^n
FV =	5000*(1+6%)^21
FV =	16997.82
b) Value of amount Deposited at age 6 at the end of 21 years
FV =	PV (1 + r )^n
FV =	5000*(1+6%)^15
FV =	11982.79
c) Value of amount Deposited at age 12 at the end of 21 years
FV =	PV (1 + r )^n
FV =	5000*(1+6%)^9
FV =	8447.39
Total Future Value =	16997.82 + 11982.79 + 8447.39
	37428.00