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View Full Version : Ending balance


ali.m7sn
Oct 12, 2011, 08:25 PM
Year contribution ending balance
1-10 2400 ?
11-20 0
21-40 0
Yield 9.00%

ebaines
Oct 13, 2011, 06:47 AM
First look at the value of each of the first ten years of contributions at year 10. The first year's contributions grow at 9% per year for 10 years, so at year ten it's worth 2400*1.09^10. The second year's contribution grows for 9 years, the third year's for 8, etc. So at year ten you have a series of 10 contributions that have grown as follows:

Year 10 value = 2400 x (1.09^10 + 1.09^9 + 1.09^ 8 +... + 1.09^1).

Then for the next 30 years no further contribuitions are made, so the amount you had at year 10 is simply compounded at 9%:

Year 40 value = year 10 value x 1.09^30.

Post back with what you get for an answer.