You may use a spreadsheet for this one. If $60 is put in an account that gets 7% per year, and I add $15 at the end of each year, how much will I have at the end of 8 years
The formula for this would be:
A=P x [(1+APR)^y-1]/APR where A is the final amount in the account, P is the annual contribution,APR is annual percentage rate, and y is the number of years. So, we have:
A=15x[(1+.07)^7-1]/.07=$129.81
To this, we add the amount of $60, the amount the account started with, and its' interest over 8 years, which is:
60x(1.07)^8= 103.09, which gives us a grand total of 129.81+103.09=$232.90 ☺☺☺☺
To calculate the amount you will have at the end of 8 years with annual additions and an annual interest rate, you can use a spreadsheet with a formula.
1. Open a new spreadsheet in a software like Microsoft Excel or Google Sheets.
2. In column A, from A1 to A9, enter the years from 0 to 8 (0 represents the current year, and 8 represents the end of the 8th year).
3. In column B, from B1 to B9, enter the annual additions. In this case, it will be $15 for each year (except the first year, as it already has a balance of $60).
4. In column C, from C1 to C9, calculate the balance for each year using the following formula:
- In cell C1, enter the formula `=$B$1`. This represents the initial balance of $60.
- In cell C2, enter the formula `=C1*(1+7%) + $B$2`. This calculates the balance for year 1 by adding the interest (7% of the previous balance) and the annual addition.
- Copy the formula from C2 to cells C3 to C9. The references to C1 and B2 will adjust accordingly.
5. In cell C9, you will have the final balance at the end of 8 years.
By using the spreadsheet and the formulas described above, you will be able to calculate the amount you will have at the end of 8 years.