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Suppose that you deposit $391 in a savings account at Prosperity Bank at the end of...

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Finance

Suppose that you deposit $391 in a savings account at ProsperityBank at the end of each of the next 10 months. You plan to leavethese contributions and any interest earned in the account until 10months are up. The interest rate is 6.38% per month. What is thefuture value of your account at the end of the holding period? Donot round at intermediate steps in your calculation. Round yourfinal answer to the nearest penny. Do not type the $ symbol.

Answer & Explanation Solved by verified expert
3.7 Ratings (507 Votes)

Future Value (FV) of Cash flow:
(Cash Flow)*((1+i)^N)
i=interest rate/period =6.38%=0.0638
N=Number of periods to the future
A N=(10-A) B FV=B*(1.0638^N)
MONTH Number of months to future Amount of Deposit Future Value
1 9                             391 682.207723
2 8                             391 641.293215
3 7                             391 602.832502
4 6                             391 566.678419
5 5                             391 532.692629
6 4                             391 500.745092
7 3                             391 470.713567
8 2                             391 442.483142
9 1                             391 415.945800
10 0                             391 391.000000
TOTAL 5246.592088
Future value at the end of holding period 5246.59

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