Question 5.P.6: Ms. Brown deposits $1000 in the bank at the end of the first......

Schaum’s Outline of Engineering Economics [1215911]

Ms. Brown deposits $1000 in the bank at the end of the first year, $1200 at the end of the second year, etc., continuing to increase the amount by $200 a year, for 20 years. If the bank pays 7% per year, compounded continuously, how much money will have accumulated at the end of 20 years?

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Writing A′ = $1000 + A, we have, from Section 2.7,

F = A′[F/A′, 7%, 20] = {$1000 + G[A/G, 7%, 20]}[F/A′, 7%, 20]

Substituting G = $200 and using Appendix C,

F = [$1000 + $200(7.2453)](42.1359) = $103 193.35

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