Tara invests $2,500 today and another $1,500 a year from now. Her investments starting year 2 keeps increasing by $100 every yea
r 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
1 answer:
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
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Explanation:
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9
So when we subtract these two, we get .