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savings 5 years later

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You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginning one year from today. You will deposit the money in an account that pays 6% interest. How much will you have just after you make the 5th deposit, 5 years from now?

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It shows step-by-step how to calculate the amount of money you will have to buy a condo after you make the 5th deposit, 5 years from now.

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First of all, it is compounded interest A = P(1 +r)^t since at end of each year, the interest earned from previous year will be generating interest.

For the first 3000 you deposit one year from today, after you make the 5th deposit, it will have been in the account for t = 4 years, ...

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