You open an account that pays 12% and make 15 end-of-year deposits. Your first d

Question

You open an account that pays 12% and make 15 end-of-year deposits. Your first deposit is $5000 at the end of year 1 and deposit amounts decrease at a rate of $100 per year. How much will you have in the account immediately after the 15th deposit?

Create an .xls file to solve OR capture an image of your "by hand" work and upload here.

You open an account that pays 12% and make 15 end-of-year deposits. Your first deposit is $5000 at the end of year 1 and deposit amounts decrease at a rate of $100 per year. How much will you have in the account immediately after the 15th deposit? Create an xls file to solve OR capture an image of your "by hand" work and upload here. Upload Choose a File

Explanation / Answer

ANSWER:

I = 12%

N = 15 YEARS

FV = CASH FLOW IN YEAR 1(F/P,I,N) + CASH FLOW IN YEAR 2(F/P,I,N) + CASH FLOW IN YEAR 3(F/P,I,N) + CASH FLOW IN YEAR 4(F/P,I,N) + CASH FLOW IN YEAR 5(F/P,I,N) + CASH FLOW IN YEAR 6(F/P,I,N) + CASH FLOW IN YEAR 7(F/P,I,N) + CASH FLOW IN YEAR 8(F/P,I,N) + CASH FLOW IN YEAR 9(F/P,I,N) + CASH FLOW IN YEAR 10(F/P,I,N) + CASH FLOW IN YEAR 11(F/P,I,N) + CASH FLOW IN YEAR 12(F/P,I,N) + CASH FLOW IN YEAR 13(F/P,I,N) + CASH FLOW IN YEAR 14(F/P,I,N) + CASH FLOW IN YEAR 15(F/P,I,N)

fv = 5,000(f/p,12%,14) + 4900(f/p,12%,13) + 4800(f/p,12%,12) + 4700(f/p,12%,11) + 4600(f/p,12%,10) + 4500(f/p,12%,9) + 4400(f/p,12%,8) + 4300(f/p,12%,7) + 4200(f/p,12%,6) + 4100(f/p,12%,5) + 4000(f/p,12%,4) + 3900(f/p,12%,3) + 3800(f/p,12%,2) + 3700(f/p,12%,1) + 3600(f/p,12%,0)

fv = 5000 * 4.887 + 4900 * 4.363 + 4800 * 3.895 + 4700 * 3.478 + 4600 * 3.105 + 4500 * 2.773 + 4400 * 2.475 + 4300 * 2.21 + 4200 * 1.973 + 4100 * 1.762 + 4000 * 1.573 + 3900 * 1.404 + 3800 * 1.254 + 3700 * 1.12 + 3600 * 1

fv = 24,435.56 + 21,381.12 + 18,700.68 + 16,349.18 + 14,286.90 + 12,478.85 + 10,894.24 + 9,505.93 + 8,290.06 + 7,225.60 + 6,294.08 + 5,479.22 + 4,766.72 + 4,144.00 + 3,600

fv = $167,832.14

after the 15th deposit , the total money in the account is $167,832.14

YEAR 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 CASH FLOWS $5,000 $4,900 $4,800 $4,700 $4,600 $4,500 $4,400 $4,300 $4,200 $4,100 $4,000 $3,900 $3,800 $3,700 $3,600

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