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Homework answers / question archive / On January 1, 2016, you deposited $5,300 in a savings account

On January 1, 2016, you deposited $5,300 in a savings account

Accounting

On January 1, 2016, you deposited $5,300 in a savings account. The account will earn 9 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 8 years? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) Balance in the Savings Account 2. What is the total interest for the 8 years? (Future Value of $1. Prosent Value of $1. Future Value Annuity of S1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) Total Interest 3. How much interest revenue did the fund earn in 2016 and in 2017? (Round your final answers to 2 decimal places.) 2016 Interest Revenue 2017 Interest Revenue

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Ans.

Working

A/1 B C D E
2 Year Year Interest Total Interest Balance
3 1 $477.00 $477.00 $5,777.00
4 2 $519.93 $996.93 $6,296.93
5 3 $566.72 $1,563.65 $6,863.65
6 4 $617.73 $2,181.38 $7,481.38
7 5 $673.32 $2,854.71 $8,154.71
8 6 $733.92 $3,588.63 $8,888.63
9 7 $799.98 $4,388.61 $9,688.61
10 8 $871.97 $5,260.58 $10,560.58

Formula

A/1 B C D E
2 Year Year Interest Total Interest Balance
3 1 =5300*9% =+C3 =5300+D3
4 2 =+E3*9% =+D3+C4 =+E3+D4-D3
5 3 =+E4*9% =+D4+C5 =+E4+D5-D4
6 4 =+E5*9% =+D5+C6 =+E5+D6-D5
7 5 =+E6*9% =+D6+C7 =+E6+D7-D6
8 6 =+E7*9% =+D7+C8 =+E7+D8-D7
9 7 =+E8*9% =+D8+C9 =+E8+D9-D8
10 8 =+E9*9% =+D9+C10 =+E9+D10-D9

or

A = P ( 1 +r/n)nt

Where,

A = Amount

P = Principal Amount = $ 5,300

r = Rate of Interest = 9%

n = Number of times interest applied per time period = Annually i.e 1

t = Number of time period = 8 Years

A = $ 5,300 * ( 1 + 9%/1)1*8

A = $ 5,300 * ( 1.09) 8

A = $ 5,300 * 1.99256264168

A = $ 10,560.58

1. Balance in savings Bank account at the end of 8 year = $ 10,560.58

2.Total Interest for 8 Years = Ending Balance - Initial Principal Balance = $ 10,560.58 - $ 5,300 = $ 5,260.58

3. Interest Revenue in 2016 = $ 477 (Refer Table above) or $ 5,300 * 9% = $ 477

Interest Revenue in 2017 = $ 519.93 (Refer Table above) or $ 5,777 * 9% = $ 519.93

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