Finance - Annuities

Natasha plans to deposit $4,000 per year in her account for each of the next 4
years. Thereafter, she expects to deposit $1,500 per year for another 4 years. All
deposits are made at year-end. Interest rates are expected to be 8 percent for the
next 2 years, and 11 percent thereafter. Interest is compounded annually. (a) What
will Natasha's bank balance be at the end of year 8?

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asked by Niki
  1. first 4 years

    S = 4000 [ 1.08^4 -1 ]/.08
    = 18024.45

    second 4 years
    first what happens to the 18024.45 that we have in the account. It earns 11% compounded yearly
    18024.45 (1.11)^4 = 27362.38
    In addition we have 1500 per year deposited
    S = 1500 [1.11^4 -1 ]/.11
    = 7064.60

    27362.38 + 7064.60 = 34426.98

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    posted by Damon
  2. Youre wrong you suck

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