Question

1. Dr. Acosta has been secretly depositing $10,500 in her savings account every December starting in 1994. Her account earns 6 percent compounded annually. How much did she have in December 2005?

[Hint. Assume the final deposit is made in 2005. Draw a timeline and make sure to carefully count the years.]

Answer 1

- Annual Periodic Deposit each year = $10,500

No of deposit payments = 12

Calculating the Future Value at the end of year 2005:-

Where, C= Periodic Deposits = $10,500

r = Periodic Interest rate = 6%

n= no of periods = 12

Future Value = $177,134.38

So, amount she will have in December 2005 is $177,134.38

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