at the age of 30 you decide to start saving money At first y

at the age of 30 you decide to start saving money. At first you can only afford to deposit $200 per month. However, at the age of 38 you are able to deposit $300 per month. Then at the age of 45 you raise your monthly deposit again to $500 per month. Finally at the age of 50 you ge promoted to president of the company and are able to deposit $2000 per month into the account. Assuming your account is earning prime interest rate + 4% in interest, compounded monthly, how much do you have in your account at the age of 70? Treat each tine that you change the deposit amount as a seperate annuity, and compute the future value (FV) on each annuity seperately. Assume that each annuity earns compound interest during the time it is not receiving deposits. show work using formula

Solution

Amount deposited monthly -- 200 -- 8 years -- 96 months -- MV: 26025 -- FV after 32 years --262,979.84

- 300 7 years -- 84 months-MV:32847 -- FV after 24 years-- 186,163.49

500 5 years -- 60 months--MV:36206 -- FV after 20 years -- 153,678.42

2000 20 years -- 240 months--MV: 1074831

Total amount available at 70 years = Sum of the above 4 = 1677652.75

Formula for Recurring deposit used:

A = P (1+    r     ) ⁿ
            400

r = Rate of interest
n = Number of quarters
P = Principal amount
A = Maturity value

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Formula for future value: