What amount would you have in your savings account in 5 years, if it has a balance of $1,234 today and you deposit an additional $1,234 two years from today?
Assume that the savings account earns 5% per year, compounded annually.
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A. B. C. D. E.Explanation
Solve this question as two compound interest problems. The first $1,234 will be in the account for 5 years. The second $1,234 will be in the account for 3 years.
Find the FV of both values 5 years from today and add them together. On the BAII Plus, press 5 N, 5 I/Y, 1234 PV, 0 PMT, CPT FV, which yields $1,574.93. Then press STO 1. Then press 3 N, CPT FV, which yields $1,428.51. Press + RCL 1 = to see the answer. On the HP12C, press 5 n, 5 i, 1234 PV, 0 PMT, FV. Then press STO 1. Then press 3 n, FV. Press RCL 1 + to see the answer. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.