Deposits are made at the end of years 1 to 7 into an account paying 11.0%/year c

Question

Deposits are made at the end of years 1 to 7 into an account paying 11.0%/year compounded annually. The deposits much will be in the account after the last deposit? $ start at 5000 and increase by $1000 each year. How Sally Saverte deposts $5273 in an account on her 26th birthday, Each year after that she deposits the account imediatly after the 35th deposit is made if a. the account earned 7%/year compounded annually. S b, the account earned 12%/year compounded annualy $1350 more. Using a gradient series factor determine how much will be in Notes Ask Your Consider the following Cash Fiow profile EOY Cash FlowEOY Cash FlowEOY Cash Flow ($50,000) $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 4 5 a. what is the present worth for the cash flow series with L2%/year compounded annualy b. what is the future value on year 8 ir the interest rate is 4%/year compounded annually. 3 8

Explanation / Answer

5. Account will be worth $17180.68 after last deposit. And after the end of the 7th year, it will be worth $19070.55

6.a) There will be $225,762.9 after the 35th deposit with the rate of interest at 7% compounded annually.

b). There will be $756,583.75 after the 35th deposit with the rate of interest at 12% compounded annually.

7.

7. a) Present value Cash Flow Stream Details

Period Cash Flow Present Value

1 -50,000.00 -44,642.86

2 13,000.00 10,363.52

3          12,000.00 8,541.36

4 11,000.00 6,990.70

5          10,000.00 5,674.27

6 9,000.00 4,559.68

7 8,000.00 3,618.79

8 7,000.00 2,827.18

9 6,000.00 2,163.66

            Total: 96.31

b) Future value Cash Flow Stream Details

Period Cash Flow Future Value

1 -50,000.00 -68,428.45

2       13,000.00 17,107.11

3      12,000.00 15,183.83

4       11,000.00 13,383.18

5         10,000.00 11,698.59

6        9,000.00 10,123.78

7 8,000.00 8,652.80

8 7,000.00 7,280.00

9        6,000.00        6,000.00

         Total:             21,000.83

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