Question

You are going to deposit $24,500 today. You will earn an annual rate of 5.5 percent for 8 years, and then earn an annual rate of 4.9 percent for 11 years. How much will you have in your account in 19 years

Answer 1

Answer:

Future value at the end of 19 years =$63,637.94

Explanation:

The Future value (FV) of an investment is the total amount (principal plus interest) that will accumulate in the future where interest is paid and compounded at a particular rate per period for a certain number of periods.

This can be done using the formula below

FV = PV × (1+r)^(n)

FV- Future Value

PV- amount invested, n- number of years, r - interest rate

The amount due after 19 years would be determined in two steps

Step 1: FV of 24,500 at 5.5% for 8 years

FV = 24,500× (1+0.055)^8 =37,599.819

Step 2 : FV of 37599.81962  invested for 11 years at 4.9% p.a

FV = ?  P=37,599.81,  n- 11, r- 4.9%

FV = 37,599.81 × (1.049)^11= 63,637.94

Future value at the end of 19 years =$63,637.94