Question
Fourteen years ago, your uncle opened an investment account to pay for your college education. He was supposed to put $3,000 in the account at
Fourteen years ago, your uncle opened an investment account to pay for your college education. He was supposed to put $3,000 in the account at the end of each year, but in year 6, he forgot to make a deposit. In year 8 he put $6,000 instead. If the account pays an annually compounded interest rate of 7%, how much money is there now? (all deposits are made at the end of the year, including the first one).
This is my work. I'm a little confused on the annually compounded interest rate. My numbers in the 5th and 6th columns add up until year 6, when I got confused. Can you please explain what I did wrong and how to fix it? I would like to understand better. Thank you!
Year Payment APR Value of Account Yearly Payment With Interest 1 2 3 4 5 6 7 8 9 10 11 12 13 14 $3,000 $3,000 $3.000 $3.000 $3,000 $0 $3,000 $6,000 $3,000 $3,000 $3,000 $3,000 $3.000 $3,000 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% Annually Compounded Interest Rate 1.0000 1.0700 1.1449 1.225 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 2.1049 2.2522 2.4098 $3,000 $3.210 $3.434.70 $3.675.13 $3,932.39 $1,207.65 $4,502.19 $9,634.80 $5,154.56 $5,515.38 $5,901.45 $6,314.56 $6,756.57 $7,229.54 $3,000.00 $6.210.00 $9.664.70 $13,319.83 $17,252.22 $18.459.87 $22,752.22 $30,344.71 $35,468.84 $40.951.66 $46,818.27 $53,095.55 $59,812.24 $66,999.10Step by Step Solution
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