Question

You just opened a brokerage account, depositing $2,000. You expect the account to earn an interest rate of 8.84%. You also plan on depositing $2,000 at the end of years 5 through 10. What will be the value of the account at the end of 20 years, assuming you earn your expected rate of return

Answer 1

Based on the expected rate of return and the amount to be deposited over the 20 years, the value of the account would be $45,844.

What would the account be worth in 20 years?

This can be found as:

= Future value of deposits from 5 through 10 years at 20 years + Future value of today's deposit in 20 years

Solving gives:

= ((2,000 x ( ( 1 + 0.084)⁶- 1 ) / 0.084) x (1 + 0.084)¹⁰) + (2,000 x 1.084²⁰)

= (14,986.05 x 1.084¹⁰) + (2,000 x 1.084²⁰)

= $45,844

Find out more on future value at brainly.com/question/14761171.

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