HELP!!! MATH, FINANCE OR ACCOUNTING?
My Question is .If I open a savings account earning interest @5% with $5,000 and add $5,000 each year for 9 years, then increase the amount to $10,000 each year for 5 years still earning 5% interest, then add $25,000 per year @ 5% for 5 years finally increasing the yearly amount to $50,000 a year each year for 5 years….How much would i have in this account year 26?
Please, I do not know accounting or finance I am in my teens and trying to figure out when and how much to start saving for retirement
( I’m not kidding) …If possible please explain how to do the calculations……Thank You
The easiest way to compute this is to create a table with the following columns:
Beginning Balance: $0 in the first year; after the first year this is the ending balance from the previous year
Contribution: The amount that you add at the beginning of each year.
Interest Rate: 5% in your example
Interest: (Beginning Balance + Contribution) * (Interest Rate)
Ending Balance: Beginning Balance + Contribution + Interest
I came up with $724,576.21 at the end of year 25. My table is as follows, although it won’t line up very well in this format:
YearBeg. BalanceContributionRateInterestEnd. Balance
1″ 0.00 ” ” 5,000.00 “5.0% 250.00 ” 5,250.00 ”
2″ 5,250.00 “” 5,000.00 “5.0% 512.50 ” 10,762.50 ”
3″ 10,762.50 “” 5,000.00 “5.0% 788.13 ” 16,550.63 ”
4″ 16,550.63 “” 5,000.00 “5.0%” 1,077.53 “” 22,628.16 ”
5″ 22,628.16 “” 5,000.00 “5.0%” 1,381.41 “” 29,009.56 ”
6″ 29,009.56 “” 5,000.00 “5.0%” 1,700.48 “” 35,710.04 ”
7″ 35,710.04 “” 5,000.00 “5.0%” 2,035.50 “” 42,745.54 ”
8″ 42,745.54 “” 5,000.00 “5.0%” 2,387.28 “” 50,132.82 ”
9″ 50,132.82 “” 5,000.00 “5.0%” 2,756.64 “” 57,889.46 ”
10″ 57,889.46 “” 10,000.00 “5.0%” 3,394.47 “” 71,283.94 ”
11″ 71,283.94 “” 10,000.00 “5.0%” 4,064.20 “” 85,348.13 ”
12″ 85,348.13 “” 10,000.00 “5.0%” 4,767.41 “” 100,115.54 ”
13″ 100,115.54 “” 10,000.00 “5.0%” 5,505.78 “” 115,621.32 ”
14″ 115,621.32 “” 10,000.00 “5.0%” 6,281.07 “” 131,902.38 ”
15″ 131,902.38 “” 25,000.00 “5.0%” 7,845.12 “” 164,747.50 ”
16″ 164,747.50 “” 25,000.00 “5.0%” 9,487.38 “” 199,234.88 ”
17″ 199,234.88 “” 25,000.00 “5.0%” 11,211.74 “” 235,446.62 ”
18″ 235,446.62 “” 25,000.00 “5.0%” 13,022.33 “” 273,468.95 ”
19″ 273,468.95 “” 25,000.00 “5.0%” 14,923.45 “” 313,392.40 ”
20″ 313,392.40 “” 50,000.00 “5.0%” 18,169.62 “” 381,562.02 ”
21″ 381,562.02 “” 50,000.00 “5.0%” 21,578.10 “” 453,140.12 ”
22″ 453,140.12 “” 50,000.00 “5.0%” 25,157.01 “” 528,297.13 ”
23″ 528,297.13 “” 50,000.00 “5.0%” 28,914.86 “” 607,211.98 ”
24″ 607,211.98 “” 50,000.00 “5.0%” 32,860.60 “” 690,072.58 ”
25″ 690,072.58 “” 0.00 ” 5.0%” 34,503.63 “” 724,576.21 “
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