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 Post subject: tricky superannuationPosted: Sat, 23 Oct 2010 05:19:13 UTC
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Joined: Mon, 23 Aug 2010 09:41:22 UTC
Posts: 3
A superannuation fund paid 6% p.a for the first 10 years and then 10% p.a after that. If Bryce puts \$5000 into this fund at the end of each year, how much would he have at the end of 25 years?

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 Post subject: Posted: Sat, 23 Oct 2010 07:50:32 UTC
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Joined: Sun, 24 Jul 2005 20:12:39 UTC
Posts: 3724
Location: Ottawa Ontario
Future value of periodic deposit D:
F = D[(1+i)^n - 1] / i

F = 1.10^15[5000(1.06^10 - 1) / .06] + 5000(1.10^15 - 1) / .15

Breakdown:
[5000(1.06^10 - 1) / .06] : the 1st 10 deposits plus interest
1.10^15 : interest for 15 years on above
5000(1.10^15 - 1) / .15 : the last 15 deposits plus interest

OK??

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