Chapter 3 - Nonlevel annuities - Geometric

A trust fund has 7000 dollars on January 1, 2020. It pays interest once a year starting on January 1, 2021 at an annual effective rate of 5%. (a) If the beneficiary makes no withdrawals from the fund, the balance at the end of 10 years will be (b) Now assume that the beneficiary will be allowed to withdraw the interest payment and an additional 10% of the balance on each January 1 for 10 years. She will then immediately deposit the total withdrawal amount into a better paying savings account that earns at an annual effective interest rate of 8%. At the end of 10 years, the total balance in the trust fund and the savings account combined is