Question

Tara invests $2,500 today and another $1,500 a year from now. Her investments starting year 2 keeps increasing by $100 every year for the next 10 years from today. She stops investing from year 11 until year 20. If she earns a rate of return of 7% on her investments, determine future worth of her investments 20 years from now

Answer 1

Answer:

$61,175

Explanation:

Base on the scenario been described in the question, we expected to solve for the future worth

The table of the cash flow is shows in the picture

We can find that by calculating the Future worth

Future Worth = {2,500 + 1,500(P/A 7%,10) 100 + (P/G 7%,10) } [F/P 7%, 20]

Future worth = { 2,500 + 1500(7.024) + 100(27.716)}

Future worth = $61,175