Question
You can save $1,000 per year for the next six years in an account earning 10 percent per year. How much will you have at
You can save $1,000 per year for the next six years in an account earning 10 percent per year. How much will you have at the end of the sixth year if you make the first deposit today?
(Background: The professor explained that there is a payment of $1,000 made at T=0 then 6 more payments of $1,000 each made during T=1 through T=6. Therefore, he explained that number of payment N=7. According to him, this is about future value of ordinary annuity with N=7. However, I took this as $1,000 payments were made at the beginning of each period for six years. I calculated a future value of annuity due with N=6.)
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