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What will be the balance in the savings account

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Q1) Tom wants to purchase a house in five years. To save for the house, Tom decides to deposit $112,000 in a savings account on January 1 of this year. The savings account will earn 6% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn).

How much will be available at the end of the 5th years? What is the total interest earned over the 5 years?

Q2) Jerry wants to retire and travel around the world in ten years. He decides to deposit $9,000 in a savings account at the end of each year. The account will earn 9% annual interest, which will be added to the fund balance at year-end. The first deposit will be made at the end of this year.

What will be the balance in the savings account at the end of the 8th year (i.e., after 8 deposits)? What is the total interest earned over the 8 years?

Reference no: EM132499184

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