Danielle Salomon invests in a 10-year ordinary annuity for a graduation present.

Question

Danielle Salomon invests in a 10-year ordinary annuity for a graduation present. She contacts her bank and tells them to open an account and automatically deposit $500 at the end of the first 5 years, and $1000 at the end of the remaining 5 years. This acount will earn 11%, compounded annually. Looking back on her investment, she realized that the bank accidentally switched the intended payment values at the end of years 3 and 8. How much more or less money does she have in her account as a result of this mishap?

Explanation / Answer

$422 More money in her account she is having.

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