Starting one year from today, a series of annual deposits is made into an account offering 11.24 percent compounded annually.  The first deposit is $1,250.  The second deposit is 3 percent larger than the first, that is, $1,250 (1.03)^1.  The third deposit is 3 percent larger than the second, that is, $1,250 (1.03)^2.  This pattern of growing deposits, with each deposit being 3 percent larger than the previous one, continues until the last deposit is made at the end of year 40, that is, 40 years from today.  

What will be the balance in the account at the end of year 40, immediately after the last deposit is made?

Answer rating: 100% (QA)

To calculate the balance in the account at the end of year 40 we need to find the present value of all the deposits and then compound that value for 40 years at 1124 percent First we can find the present value of the growing deposits using the formula for the present value of a ... View the full answer