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You decided to deposit your money in the bank at the beginning of the year instead of the end of the same year, but now you are making payments of $2,250 at an annual interest rate of 8%. How much money will you have available at the end of four years?

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facundobuzzetti

Answer:

Final Value= $10,949.85

Explanation:

Giving the following information:

You decided to deposit your money in the bank at the beginning of the year. You are making payments of $2,250 at an annual interest rate of 8%.

n= 4 years

We need to use the following formula:

FV=  {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

A= annual deposit

Because the money makes interest from the beginning of the year, we have to sum the extra interest being compounded.

FV= {2250*[(1.08^4)-1]}/0.08 + {[2250*(1.08^4)] - 2250}

FV= 10,138.75 + 811.10

FV= 10,949.85

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