ames deposited $150 at the beginning of each month for two years into his savings account. For the next four years he did not make any more deposits, leaving the money in the account. The bank charges 4% interest compounded monthly. What will the balance be after 12 years? ANS: $4,404.70. Hint: first step is to find balance [FV] after 2 years, which will become the Present Value using the FV formula for compound interest since PMT=0 for the last 4 years
ames deposited $150 at the beginning of each month for two years into his savings account. For the next four years he did not make any more deposits, leaving the money in the account. The bank charges 4% interest compounded monthly. What will the balance be after 12 years? ANS: $4,404.70. Hint: first step is to find balance [FV] after 2 years, which will become the Present Value using the FV formula for compound interest since PMT=0 for the last 4 years
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 10PROB
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Question
James deposited $150 at the beginning of each month for two years into his savings account. For the next four years he did not make any more deposits, leaving the money in the account. The bank charges 4% interest compounded monthly. What will the balance be after 12 years?
ANS: $4,404.70.
Hint: first step is to find balance [FV] after 2 years, which will become the Present Value using the FV formula for compound interest since PMT=0 for the last 4 years
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