Question

Suppose you deposit $8,500 into an account earning 5.0% interest compounded annually. Determine the amount of money that will be in the account at the end of 12 years. Be sure to include an appropriate cash flow diagram,

Answer 1

Answer:

$ 15,264.78

Explanation:

Using the excel formula FV() you can calculate the amount to be received after 12 years. The diagram will be: Period Amount  Payment interest Amount + interest

1  8,500.00   425.00   8,925.00  

2  8,925.00   446.25   9,371.25  

3  9,371.25   468.56   9,839.81  

4  9,839.81   491.99   10,331.80  

5  10,331.80   516.59   10,848.39  

6  10,848.39   542.42   11,390.81  

7  11,390.81   569.54   11,960.35  

8  11,960.35   598.02   12,558.37  

9  12,558.37   627.92   13,186.29  

10  13,186.29   659.31   13,845.60  

11  13,845.60   692.28   14,537.88  

12  14,537.88   726.89   15,264.78