Example 9.16 I invest money in a savings account that pays a nominal interest rate of 6% p.a. com- pounded monthly. I open the account with a deposit of $1000 and then deposit $50 at the end of each month for a period of two years, fol- $1000 lowed by a monthly deposit of $100 for the follow- ing three years. What will the value of my savings account be at the end of the five-year period? First, draw a discrete CFD (Figure E9.16). $100 Although this CFD looks rather complicated, it can be broken down into three easy sub-problems: $50 1. The initial investment 2. The 24 monthly investments of $50 3. The 36 monthly investments of $100 59 0 1 2 3 4 24 26 27 60