You invest a single amount of $14,800 for 7 years at 15 percent. At the end of 7

Question

You invest a single amount of $14,800 for 7 years at 15 percent. At the end of 7 years you take the proceeds and invest them for 14 years at 17 percent.

How much will you have after 21 years? Use Appendix A for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

You invest a single amount of $14,800 for 7 years at 15 percent. At the end of 7 years you take the proceeds and invest them for 14 years at 17 percent.

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

Amount after 7 years=14800(1.15)^7

=$39368.29423

Hence amount after 21 years=$39368.29423(1.17)^14

=$354,608.11(Approx)

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